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Well I think you have to dig a little deeper than that. The SCOTUS just overturned 400+ years of Conservatorship law, stating that the FHFA ain't your your mom and pop's Conservator, instead it is a super conservator and can self deal so long as it benefits the public it serves.
What the SCOTUS did NOT say is that the US Government can do whatever it pleases with the twins in direct contradiction of the citizens Constitutional Rights (e.g., 5th Amendment).
I do share you're view that all it will take is a federal trial or appellate judge or panel of appellate judges to simply declare, "HaHa, you evil hedge fund guys recover 0, because Uncle Suggy signs my paycheck ever 2 weeks!"
But, IF one or more of the cases actually goes to trial and Uncle Suggy's bad acts are exposed, I think most judges are inclined to rule against the government, but at this point I will believe it when I see it.
So it will just be more sitting on our hands and waiting while in theory at least the gses retain earnings after having the United States Government expropriate billions and billions over 7 years+ from the very wards they were suppose to conserve and preserve.
It's horrible that the UNITED STATES GOVERNMENT CONTINUES TO TELL JUDGES IN DIRECT CONTRADICTION TO EVIDENCE RELEASED TO THE PUBLIC THAT THE NET WORTH SWIPE WAS PREVENTING A DEATH SPIRAL.
Think of all the Pension Funds, Retirement Funds, Community Savings Banks, and worse those approaching retirement that bought jps and/or common believing that in America, the GOVERNMENT DOESN'T NATIONALIZE PRIVATE PROFITABLE CORPORATIONS!
IT'S HARD TO BELIEVE THAT THE US GOVERNMENT IS RUNNING ROUGHSHOD OVER OUR 5TH AMENDMENT RIGHTS GUARANTEED TO ITS CITIZENS IN THE BILL OF RIGHTS IN THE UNITED STATES OF AMERICA CONSTITUTION!
And our government decision makers just carry on like it's no big deal...
https://finance.yahoo.com/news/construction-tech-company-promises-faster-100212353.html
"The company says it can build homes at least four times faster than traditional construction at a cheaper price."
I've always preferred an ownership stake as I have plenty of other bond like investments in my portfolio mix. Although at these prices it seems like the risk to potential reward of both are pretty good.
Investors have clearly preferred jps as a way to play this 13+ year conservatorship and they may be right in the end, but I personally have always liked owning businesses.
You and so many others are opportunistic active traders but I don't try to time my investments short term, I just go long.
I've been "investing" in the gses since I worked at Fannie Mae from 1988-93. I've held shares and accumulated over the decades and haven't touched them since 1995. I might buy some more when the current clowns in charge tell us what their plan is, but I don't think this is done bottoming right now, who knows?
I personally believe that at some point after the government has done all the wrong things it will do the right thing and eventually there may be some recovery. If that happens in my lifetime great if not my heirs and charitable organizations can deal with it...
In the meantime this is currently the only 'problem child' in my portfolio and I really enjoy the intersection of Real Estate Finance, Law, Economics, and Politics...
I guess for less than 3 quarters you can buy a perpetual option on the release from 'conservatorship'.
I still think the shorts are going to continue, although not much meat left on the bone...
Do you think when the federal government violates its citizens Constitutional Rights (e.g., the 5th Amendment) that their actions are legal?
From chairman of NASDAQ to jailbird! The Ponzi scheme creators have always amazed me, they play on human beings natural inclination to greed with a seriously deficient moral compass. Did Bernie EVER take personal responsibility for his bad acts?
Here the government refuses to do so and has fought the net worth swipe and unpayable loan tooth and nail.
At least Bernies victims received 50%-70% of their investment back.
I am little leary about that proposition, would you go into business if your partner has the ability to FORCE YOU TO LOSE ALL ECONOMIC VALUE OF YOUR SHARE OF THE BUSINESS AND FOR AS LONG AS IT WANTS?
The political risk associated with the gses has risen substantially for any post conservatorship prospective investor.
How long did it take Argentina bond investors to jump back in after that sovereign defaulted on their promises to bondholders?
https://nationalmortgageprofessional.com/news/fannie-mae-freddie-mac-steady-she-goes
"We could easily see a focus by Freddie and Fannie on riskier programs that center on this priorities, and we should see some work on products for high density living."
"The high G-fees and other loan-level price adjustments that we have seen during prior Democratic administrations, and payroll tax increases, may come back to satisfy the more liberal component in Congress. Freddie and Fannie have proved a source of funds for non-lending purposes in the past. Think back to 2011/2012 when Congress and the Obama Administration turned to Fannie Mae and Freddie Mac to pay for the proposed extension of the payroll-tax cut. The revenue source, in the form of higher G-fees, is a tax that has been passed on to mortgage borrowers ever since. And once a government has a source of revenue, well, the odds of giving that up are nil.
Lastly, lowering credit guidelines, or expanding credit in general, may increase the number of potential home buyers. We are already suffering from a lack of homes for sale in many desirable parts of the nation, for a variety of reasons: cheap credit, millions of people in their late 20s and 30s hitting home-buying age, and lack of builder activity for the last several years. Expanding the credit box will increase the number of bidders on starter homes, driving up prices even more. “Unintended consequences” is not something we need again in lending.
Fortunately for lenders and investors across the nation and around the world, “stable” appears to be the description for Freddie and Fannie’s direction. Markets don’t enjoy surprises, instead preferring a steady course and predictable changes and activities. Private securitization markets appear to be healthy, as indicated by the demand for jumbo and non-QM production. And at this point the GSEs are not “broken” and not in need for any sweeping changes. And so “steady as she goes” may be the best course of action in the foreseeable future."
"The surge in home prices during the pandemic could fuel the biggest dollar increase in the conforming loan limit for Fannie Mae and Freddie Mac in records dating to 1970."
"Recent home price trends suggest that in terms of raw dollars, the conforming loan limit will make its biggest leap ever on Jan. 1, increasing by more than $75,000. In percentage terms, the increase may fall short of the record 15.9 percent jump seen in 2006."
The FHFA typically releases the conforming loan limit for the year ahead in November, when it publishes the HPI for the third quarter. Even though the official conforming loan limit won’t be known until the third quarter data is available, lenders who are offering “conforming loans” of up to $625,000 seem to be on safe ground.
PennyMac is offering the following expanded conforming loan limits through the company’s broker and correspondent channels:
One-unit properties: $625,000
Two-unit properties: $800,250
Three-unit properties: $967,250
Four-unit properties: $1,202,000
https://www.inman.com/2021/10/05/fannie-freddie-loan-limits-set-for-record-50-year-leap-in-2022/
I think there is a realization by the MBA, Congress, UST, and FHFA that an eventual exit from conservatorship is in the cards, but it probably won't be finalized until all the parties know exactly where they stand from a legal standpoint.
I think the very limited group of investors left are rotating back to the perceived 'safety' of jps and so many long term holders may just have decided to exit this never ending saga...
I know but the story about what happened here is the most bizarre I have ever heard of in American business history and I don't think anyone knows exactly how and if it will end...
I think disappointment and lowered expectations are par for the course with the gses since 2008, hard to believe that they use to be the darlings of Wall Street, Freddie use to be known as 'steady Freddie' for their predictable and impressive earnings.
A cool $2 million if you get par and bought at 5% of par!
https://www.housingwire.com/articles/fhfa-puts-kibosh-on-css-issuing-non-gse-securities/
Was MC hiding something or was he blinded by his Libertarian ideology and the quest for free markets everywhere!
"A March 2019 report by the FHFA Office of Inspector General reported that its “review of internal FHFA documents found that, as of February 2019, FHFA [projected] a total of $2.13 billion in costs for development of the [CSS] platform and integration by the enterprises by June 30, 2019,” when the UMBS was launched. The report concluded that FHFA failed to disclose to Congress or the public what it knew about actual and projected costs for creating the common securitization platform."
https://finance.yahoo.com/quotes/fmcc,fnma,fmckj,fmcki,fmccm,fmcck,fmcct,fmcci,fmckk,fmccg,fmcch,fmccl,fmccn,fmcco,fmccp,fmccj,fregp,fmckp,fmccs,fmcko,fmckm,fmckn,fmckl,fnmap,fnmao,fnmfo,fnmam,fnmag,fnman,fnmal,fnmak,fnmah,fnmai,fnmaj,fnmas,fnmat,fnmfm,fnmfn/view/v1
The Great Oz hasn't decided yet on what to do if anything with the gses', but rape and pillage hasn't occurred yet but could indirectly through gfees lowered and high risk loans increased.
I don't think we've seen a bottom yet, no catalysts and MM's paradise.
Plenty of red today, but jps intraday volatility decreased to 10% from 16% yesterday.
First Bank of Oak Park and it's Community Savings Banks were another victim of Hank Paulson's decision to Nationalize the gses and wipe out the jps and common shareholders in September 2008. Up to $33 Billion in then Tier 1 Capital vanished from Community Savings Banks and other financial intermediaries.
They went out of business in 2009 and their assets were transferred to the FDIC 1 year later.
In July 2008, James Lockhart had insured everyone that the gses were in good financial shape.
"The 1st sound they'll hear is their heads hitting the floor.". Hank Paulson.
"FBOP's subsidiaries lost an estimated $800 million[5] when the United States Treasury placed government-sponsored mortgage investors Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) into conservatorship and wiped out preferred stockholders. As a result, FBOP posted an operating loss of $708 million for 2008. By the end of June, FBOP's resources had dwindled so low that the firm ranked below 98% of similar bank holding companies in terms of tier 1 leverage ratio, a measure of bank capital.
In August 2009, FBOP signed a so-called written agreement with the Federal Reserve that gave it a schedule to raise capital, improve risk management and reduce its concentration of commercial real estate loans. The bank was to submit a capital plan within 30 days.
FBOP failed to raise enough capital to satisfy the terms of the agreement. On October 30, 2009, FBOP's subsidiaries were closed by their chartering agencies and the Federal Deposit Insurance Corporation was appointed as their receiver. The FDIC entered into a purchase and assumption agreement with Minnesota-based U.S. Bancorp to assume the assets and deposit liabilities of the closed banks. The FDIC estimates its losses on the combined transaction at $2.5 billion.[6]"
https://en.m.wikipedia.org/wiki/FBOP_Corporation
On July 08, 2008: "Both of these companies are adequately capitalized, which is our highest criteria," Lockhart said in an interview with CNBC. "They have been very active in the mortgage market, and they are continuing to be. And, in fact, Congress has put on them the requirement to do jumbo mortgages and they have been doing those as well."
https://www.cnbc.com/id/25584136
Nice find! "The imposition of the
conservatorships violated Plaintiffs’ constitutional rights under the Fifth Amendment, as well as
Plaintiffs’ contractual rights. Based on the facts set forth herein, Plaintiffs assert three causes of
action: (1) unlawful taking and/or illegal exaction, as a direct claim; (2) unlawful taking and/or
illegal exaction, alternatively as a derivative claim; and (3) breach of implied regulatory contract."
When the federal government decides to Nationalize two of the largest privately owned corporations in the world, they should compensate the shareholders for their deprivation of their property.
16% intra day volatility on the jps, was it this way before the Collins decision?
https://finance.yahoo.com/quotes/fmcc,fnma,fmckj,fmcki,fmccm,fmcck,fmcct,fmcci,fmckk,fmccg,fmcch,fmccl,fmccn,fmcco,fmccp,fmccj,fregp,fmckp,fmccs,fmcko,fmckm,fmckn,fmckl,fnmap,fnmao,fnmfo,fnmam,fnmag,fnman,fnmal,fnmak,fnmah,fnmai,fnmaj,fnmas,fnmat,fnmfm,fnmfn/view/v1
Sounds like you need the money more than I do, I'll offer you that 30 cents/share you're always fond of reciting, but let's be real here, you just can't and never will hit the sell button will you?
Actual trials or pretrial motions? If you do decide to part with your 'free lottery tickets' at 'end of year tax loss harvesting time', let me know so I can buy some just for kicks.
"plus ça change, plus c'est la même chose “? Originally Uncle Suggy set the gses up as private corporations in 1968, so is that what you mean? Or are you focusing on the last 13 years?
Retribution, profit maximization, and nationalization of private corporations are undesirable traits of a powerful Sovereign...
We'll see what happens
WSJ'S take on the GSES implicit guarantee today: "Is Evergrande too big? Is there an implicit guarantee for Chinese real-estate investments similar to the foolish U.S. implicit guarantee of Fannie Mae and Freddie Mac debt? No one knows -- yet."
"So while Xi Jinping and the Chinese Communist Party can hammer internet companies and make them pledge allegiance to a "common prosperity" policy, limit videogame play, decimate the after-school tutoring business, and even denigrate television celebrities as "sissypants," they can't let real estate fail. That would be like emptying every individual retirement account and canceling everyone's pension in the U.S. Not gonna happen. China needs to orchestrate a decline in real-estate values, maybe 10% to 20%, instead of allowing a failure to trigger a massive rout. The Communist Party can't afford the political fallout from other Evergrandes. Can China pull this off? We'll see."
I hear you, but these inevitable financial crisis situations and economic downturns are going to be more harmful to everyday Americans if corporate boards can't rely on the government keeping their promises and will reject win/win government and business cooperation.
Why not slash your labor costs to the bone, delay payments to vendors, and cease all planned projects instead of taking a chance on Nationalization?
TRUST IS VITAL IN BUSINESS and these governmental shenanigans could very well hurt economic recovery for hard working Americans during the next inevitable economic crisis. ...
One other point and this one is about da gubmint and regulatory capture.
While we struggle to get the clueless Federal Judiciary to come to grips with what has occurred here over the last 13+ YEARS, in the meantime I believe that the MBA, NAR, AND NHBA AND THE FINANCIAL ESTABLISHMENT will once again look out for their own self interests at the expense of the gses.
They will simply lobby the inexperienced and easily influenced Sandra L Thompson into lowering the risk adjusted loan level pricing and gfees on high risk mortgages in the name of "increasing housing opportunities for the working class".
Just like the previous bubble. Low down payment, low credit scores loans to borrowers who will bolt once their equity is gone.
Of course there are other ways the MBA, et. al, can neuter the twins, the question is how creative will they get?
Thoughts?
“Ms. Omarova has called for ‘radically reshaping the basic architecture and dynamics of modern finance’ including nationalizing retail banking and having the Federal Reserve allocate credit,” he said in a statement. "
https://nypost.com/2021/09/30/bidens-pick-for-treasury-post-sought-end-to-banking-as-we-know-it/
So if I am reading the Collins decision correctly, A GOVERNMENT 'CONSERVATOR' IN THE FUTURE CAN PRETTY MUCH DO WHATEVER IT WANTS INCLUDING PILFERING THEIR WARDS SO LONG AS IT "BENEFITS THE PUBLIC IT SERVES", BUT THIS DOES NOT RULE OUT OTHER LEGAL AVENUES FOR RECOVERY SUCH AS A TAKING UNDER THE 5TH AMENDMENT.
Does that sound right to you?
"IMO, if the Conservator used it's special power to extend the warrant expiration dates then all pretense of this temporary Conservatorship would fall away along with cutting the thin thread that allows the Gooberment to dodge placing GSE liability on their own balance sheet in the eyes of credit rating agency."
If our morally bankrupt 'partner' in this private capital in a 1st Loss Position/government backing partnership CONTINUES TO SPIN THE FALSE 'DEATH SPIRAL' NARRATIVE TO THE FEDERAL JUDGES AND DEFEND THE NET WORTH SWIPE, WHY WOULDN'T THE FHFA/UST SIMPLY EXTEND PERPETUAL TOTAL CONTROL OVER THE GSES INTO PERPETUITY FOR THEIR LATEST POLITICAL WHIMS?
So, were the Warrants Expiration date a product of HERA or a post HERA Congressional Act?
What if anything would prevent Uncle Suggy (besides DOING THE RIGHT THING!) from extending the expiration of the Warrants for another 20 years?
The US Government has acted in a morally bankrupt manner since the Mafia takeover of the twins in 08, the FHFA like a typical 4th branch of government federal agency is more concerned in its own power, growth, and preservation, and the public including the SCOTUS is utterly clueless...
https://www.ocregister.com/2021/09/02/record-home-price-gains-zapping-mortgage-insurance/
"Fun facts for you.
Nationally, about $1 trillion of conventional mortgages, or more than 10% of the U.S. mortgage market, is covered by PMI, according to Mike Zimmerman, senior vice president of MGIC, one of America’s largest mortgage insurance providers. The current crop of newly originated PMI business is about 85% purchase and 15% refinance.
About 13% of California mortgages purchased by Fan and Fred from January 2020 through this past June, or more than $106 billion, had mortgage insurance, according to Inside Mortgage Finance.
Meanwhile, Southern California home prices increased 26% since the start of 2018, according to Attom Data Solutions.
Borrowers with a Federal Housing Administration mortgage have the same opportunity to chuck their mortgage insurance. If you have an FHA loan, eliminate the monthly premium by refinancing into a conventional mortgage."
https://www.ocregister.com/2021/09/30/fannie-freddie-flip-makes-rental-acquisitions-enticing-again
"As a result, most lenders were forced to significantly jack-up the consumer pricing — like lots of points or a higher rate. Worse, some took rental property financing entirely off the menu for loans sold to F & F.
Fast forward to Sept. 14. Acting FHFA Director Sandra Thompson (President Biden appointee) suspended the ban-the-rental plan. Now we’re back to “bring it.”
You now can take another bite of the apple if you missed out before. Whether buying is on your brain, knocking the interest rate down or pulling money out to expand your rental portfolio, now is the time
Fannie’s general rule is to limit investment property loans to a max of 10 financed properties. I know of one lender who allows borrowers to own up to 12 properties, with or without loans."
Under the guise of the 13+ year 'conservatorship' the government has constructively Nationalized two of the world's largest and most profitable businesses.
Moody's, Fitch, and Standard & Poor's as meaningful and relevant Sovereign debt rating agencies shouldn't ignore DEFACTO NATIONALIZATIONS BY SOVEREIGN DEBT ISSUERS BY EXCLUDING THE GSES LIABILITIES ON THE FEDERAL BALANCE SHEET!
"In its usage in law, constructive means what the law considers something to be, irrespective of the intentions of the relevant actor and irrespective of actual facts. It has also been defined in these terms: "That which exists, not in fact, but as a result of the operation of law.". Wikipedia
This is from Black's Law Dictionary: What is CONSTRUCTIVE?
That which Is established by the mind of the law in Its act of construing facts, conduct, circumstances, or instruments; that which has not the character assigned to it in its own essential nature, but acquires such character in consequence of the way in which it is regarded by a rule or policy of law; hence, inferred, implied, made out by legal interpretation. Mid- dleton V. Parke, 3 App. D. C. 160.
https://thelawdictionary.org/constructive/