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According to obiterdictum FnF may uplist while in conservatorship.
15 minute reversal?
Now that is unwarranted optimism!
At a penny a minute we could still close at a new 52 week high
Wouldn't it have been great to get in for the first time less than a year ago. So much less stressful but our victory will be so much sweeter.
Go FnF!
So he has learned well from previous presidents. Don't blame the player! I know you have heard that before.
Go FnF!
I bought some at 1.08. Wish it could have been more. It was one of those times that I purchased because I was pissed off. Now it pays off. But it was a sinking feeling buying at 1.08 and watching it drop to .98. We are all right now!
Go FnF!
Ok. I may throw a dollar in your hat or guitar case. Hey exposure is exposure so you have done your part in your way to shine a light on this theft.
Go FnF!
Man we touched.98 less than a year ago. Look at the 52 week low. I wish I had more money on the sidelines one year ago.
Tell it to the Don. It will be a part of his campaign slogan and the public will buy it.
So you are more than a folksy singer/song writer!
True but it will still reflect in share price as it will signal the end is near. In short, we blast off.
Game over? As in the govt. will settle fast and amicably for shareholders?
So we win because he will turn lemons to lemonade by saving the housing industry. Wait for the news spin.
And just like that you are all caught up!
It is more fun to go with the comedy
Don't blame Arnold for his cousin's behavior. I did suggest that he stop loaning money to Zride.
I believe that prefs are down due to Calabria's statement about a slow recap. A fast recap serves preferred shares. A slow recap serves common shares because there is likely to be less dilution.
Go FnF!
Not too many people would feel sad about a new 52 week high. You are so jaded. I do understand why. You tell us all why quite frequently. Let yourself be happy with a small win once in a while or you will give yourself an ulcer.
Go FnF!
Risky at this juncture. Retained capital about to be bumped up significantly.
Go FnF!
So then overall this is good news for fnma and fmcc. A slow recap is better for shareholders due to less dilution. Am I correct ?
Go FnF!
There could be some negative news but I don't believe that anybody in the administration will say something negative about Trump's plan. Even Calabria said that he would buy the twins. Stop waiting for some big dip. If you want some big gains buy and ride it out.
Go FnF!
Some folks have been watching since we were under $3.00 for a dip to get in! This is not a day trade or a short term investment. Big money over the next 2 years.
Go FnF!
The ball is in FHFA’s court for reforming the GSEs
By Edward Pinto Published September 17 2019, 9:00am EDT
Eleven years into the conservatorship of the government-sponsored enterprises and yet, another report — this one by the Trump administration — has come out with a plan for housing finance reform.
But this one promises to be different, since many of the recommendations may be done administratively.
In the week following Treasury report’s release, Federal Housing Finance Agency Director Mark Calabria has already started implementing one of the key recommendations — reining in Fannie Mae and Freddie Mac’s exploding multifamily businesses.
The GSEs were up to their old tricks, using taxpayer advantages to crowd out the private sector and procyclically grow an already burgeoning multifamily debt market. This was the result of loopholes put in place by Calabria’s predecessor. From 2015 to 2017, the GSEs' volume grew three times faster than the overall market.
This prompt action bodes well for others to follow, as Calabria accomplished it by amending the GSEs conservatorship scorecard, an expeditious and effective method.
Yet, most of the media reports have focused on the legislative proposals to reform Fannie Mae and Freddie Mac, legislation that is unlikely to be enacted anytime soon. Ignored are the many recommendations for prompt administrative action to reduce crowding-out by leveling the playing field between the GSEs and the private sector; and shrinking the GSEs’ footprint.
The Treasury report, along with a companion one by the Department of Housing and Urban Development, have given Calabria and FHA Commissioner Brian Montgomery the green light to take administrative action and do so quickly. This is all the more feasible, since today’s lower rates and strong market demand would minimize the impact, a practical consideration with a presidential election looming.
Shrinking the GSEs’ massive single-family footprint is also called for. Today, the taxpayers are on the hook for over $5 trillion in GSE debt. Yet, the only plausible reason for the government to back the housing market is to help low or moderate income families buy homes.
An evaluation of the GSEs’ 2018 business shows that they fail to meet this simple test — less than 25% goes to those buying a primary residence costing less than $250,000. Once again, the GSEs have used their numerous advantages to crowd out the private sector and operate in a dangerous pro-cyclical fashion.
The Treasury report endorses the Consumer Financial Protection Bureau’s decision to allow a so-called patch to sunset for its Qualified Mortgage rule. The QM rule was established in response to the housing crisis by setting an ability-to-repay standard for underwriting mortgages. But it also allowed a temporary patch for any GSE-backed mortgage to qualify under the rule, which greatly advantaged the GSEs. This would be a huge step in leveling the playing field between the GSEs and the private sector.
Independent of changes made by the CFPB, the FHFA should examine which single-family mortgage loans under a revised ability-to-pay requirement should be eligible for acquisition by the GSEs, as the Treasury report recommends. Next, the FHFA should implement GSE capital requirements that require sufficient capital to remain viable during a severe economic downturn, while also ensuring shareholders bear potential losses instead of taxpayers.
The Treasury report is also correct in suggesting that the FHFA, in consultation with the other federal financial regulators, should “harmonize the regulatory requirements” for the GSEs and other housing finance participants.
A key recommendation calls for the FHFA to reduce the GSEs’ footprint by “tailor[ing] support for cash-out refinancings, investor loans, vacation home loans, higher principal balance loans, or other subsets of GSE-acquired mortgage loans.” This would reduce crowding out, shrink the GSEs' footprint and have little or no impact on the home purchase market.
Finally, in order to end the competition between the GSEs and FHA, Calabria and Montgomery need to clarify the appropriate roles and overlap between the GSEs and the FHA, as the report recommends. They should address the GSE's acquisitions of high loan-to-value and debt-to-income loans. They should also address the FHA’s underwriting of cash-out refinances, conventional-to-FHA refinances and loans to FHA repeat buyers.
This is necessary to end the unseemly taxpayer-supported competition for high-risk loans between these agencies and the increasing risk of FHA’s insurance portfolio.
With entry-level home prices still rising rapidly and the supply of homes constrained, taking these steps now would slow unsustainable house price appreciation. This would be good news for first-time homebuyers, who tend to be of lower income and minorities. These same borrowers tend to take out the loans with the greatest risk of default with the most risk layering.
This would be a win-win for the first-time buyers and the taxpayers.
https://www.americanbanker.com/opinion/the-ball-is-in-fhfas-court-for-reforming-the-gses
The morning dip always refreshes. It really picks up the price!
Go FnF!
Usually the oppisite. Germany follows us
Yank you can't fast fwd to the ending. You have to watch the whole 12 seasons all the way back to 2008. At least this is the final season.
Go FnF!
About a million shares every 10 minutes!
Go FnF!
There is nothing as refreshing as a morning dip!
Go FnF!
Sorry if I misled anybody about fnma options. Really I was just considering how awesome it would be if they were available now. I would be very leveraged with my kid's college fund money!
Just kidding again
Go FnF!
How about purchasing 50 covered call options contracts 90 days out!
Go FnF!
The board is lively tonight. I sense we are all waiting with anticipation. Like a Heinz ketchup commercial.
Go FnF!
Be careful how you define expert. Fnma was trading around 3.20 when that EXPERT upgraded it from 2.00 to 3.00
FHFA says Fannie and Freddie must direct over one-third of multifamily loans towards affordable housing
By Jacob Passy
Published: Sep 15, 2019 5:42 am ET
The Federal Housing Finance Agency expands multifamily lending caps for the two government-controlled organizations
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Fannie Mae and Freddie Mac now have larger caps on the amount of multifamily loans they can purchase.
The Federal Housing Finance Agency will increase caps on the amount of multifamily loans Fannie Mae and Freddie Mac can purchase next year while also closing some loopholes.
The regulatory agency will now limit the two firms to purchasing $100 billion in multifamily-housing residential loans, respectively, between the fourth quarters of 2019 and 2020. The caps are substantially larger than in previous years. In 2018 and 2019, Fannie Mae FNMA+7.56% and Freddie FMCC+7.46% were only allowed to purchase $35 billion in multifamily loans each, however “mission-driven” loans excluded from the caps brought the total volume to $142.5 billion in 2018.
The FHFA began setting caps on Fannie and Freddie’s multifamily businesses in 2014 in an effort to support liquidity in the multifamily market while also working to prevent private capital from being crowded out.
Beyond expanding the size of the caps, the FHFA also made other revisions to how Fannie and Freddie can conduct their multifamily businesses. In particular, the agency will now require the two firms to have over one third (37.5%) of their multifamily activities be directed toward affordable housing.
Read more: 5 major changes the Trump administration wants to make to housing finance
This can include loans on properties subsidized by the Low Income Housing Tax Credit program, loans on developments created under inclusionary zoning rules, loans on properties covered by a Section 8 Housing Assistance Payment contract. Portions of loans can count on a pro-rata basis toward this requirement if a certain percentage of units within a multifamily development are considered affordable, based on the area’s median income.
Furthermore, the new lending caps eliminate exclusions that allowed Fannie and Freddie to purchase loans in excess of the limits previously in place. Notably, the agency threw out a loophole that allowed Fannie and Freddie to buy green loans that were used to finance certain energy and water efficiency improvements without it counting toward their overall spending limits.
Between 2015 and 2017, Fannie and Freddie’s share of new multifamily loans increased from 36% in 2015 to 49% in 2017, the FHFA said. Much of that growth was attributable to the green loans exclusion. Around half of the loans both firms purchased in 2017 and 2018 were excluded from the FHFA’s lending caps.
The FHFA’s choice to expand the lending caps — while also closing the loopholes that allowed lending activity beyond them — comes as the Trump administration called on the Treasury Department and the FHFA to consider limiting Freddie and Fannie’s multifamily footprint as part of its broader plan for housing finance reform.
See original version of this story
https://www.marketwatch.com/amp/story/guid/7EF75856-D62D-11E9-8D76-5B5A03976EA7
Don't try to fix Fannie Mae and Freddie Mac. Phase them out instead
Author's email is included if anybody thinks it is worth it to set him straight.
Opinion: The Trump administration's reform plan wouldn't really reduce the federal government's role in the home lending market.
The United States could have a healthy housing market, if government would stop trying to help it out.
The Trump administration supposedly wants to reduce the federal government’s involvement in housing. But its recently revealed reform of Fannie Mae and Freddie Mac, known in wonk circles as government-sponsored enterprises, isn’t much of a step in that direction, if any at all.
The GSEs purchase mortgages, bundle them, and then sell the bundles as mortgage-backed securities. They guarantee payment on the mortgages to purchasers of the securities.
The privatization that wasn't
Fannie and Freddie began life as government agencies. They were supposedly spun-off and privatized. They obtained private stockholders
Government professed that they were stand-alone private entities. The market, however, assumed that the federal government actually was a backstop for the GSEs, that it wouldn’t let them go under in a crunch.
That turned out to be a safe assumption.
Because of the implicit backing of the federal government, the GSEs had a significant market advantage and dominated the MBS market.
They, however, began to lose market share as underwriting standards loosened in the housing bubble of the 2000s. To retain market share, and to respond to political pressure to do more for lower-income and higher-risk buyers, Fannie and Freddie loosened the underwriting standards for the mortgages they purchased.
Then the housing bubble burst. The federal government took the GSEs into conservatorship and, as the market had assumed, guaranteed their guarantees on mortgage-backed securities.
That was in 2008. They remain in conservatorship today, government agencies in all but name.
How Trump plans to reform that
The Trump administration wants to take them out of conservatorship and restore them as private corporations. But this time, rather than an implicit federal government backstop, there would be an explicit one.
The federal government would formally guarantee the guarantees Fannie and Freddie offer on their mortgage-backed securities. But the GSEs would have to maintain much larger capital reserves, so the crunch that would trigger a government bailout would have to be harder and deeper.
Moreover, the GSEs would have to pay in effect a premium for the government guarantee. And other issuers of mortgage-backed securities could apply for the same government backing under the same conditions.
Taxpayer risk would supposedly be reduced through the higher capital requirement. And premiums supposedly would pay in advance for any bailouts that might be required.
Allowing other issuers of MBSs to obtain the same government backing supposedly would reduce market distortion and increase competition.
A better alternative: Phase them out
Overall, however, it’s hard to say that this represents a reduced role for the federal government in the housing finance market. Taxpayers ultimately guarantee more than 60% of mortgages in America today, between the GSEs and other government mortgage guarantee programs, principally Ginnie Mae and the Federal Housing Administration. Under the Trump administration’s proposal, that percentage is as likely to go up as down.
Regardless of how clean the guarantee arrangement starts out, it will inevitably be used as leverage to promote political goals. Politicians like loose underwriting standards for mortgages and preferences for favored political constituencies. And that’s how the housing market gets into trouble.
A group of free-market thinkers has devised an elegant alternative to truly reduce the role of the federal government. Simply reduce over time the size of the mortgages the GSEs purchase for securitization, until they disappear.
This would amount to a controlled experiment, to see if purely private securitizers would step up as the GSEs receded.
There is little reason to believe that they wouldn’t. People are still going to want to buy homes. With appropriate underwriting standards, mortgage-backed securities are safe long-term investments. There should be a robust market for them even without government guarantees.
The federal backstop to the GSEs is only one of numerous government distortions of the housing market, from the mortgage interest deduction to the Federal Reserve purchasing nearly $1.5 trillion in government-backed MBSs.
Phasing out Fannie and Freddie, rather than attempting to rehabilitate them, would be a modest step in the right direction.
Reach Robb at robert.robb@arizonarepublic.com.
https://amp.azcentral.com/amp/2303413001
Obi, thank you for your prompt responses. As always your answers are pragmatic and accurate with little speculation. Joe Friday would be happy to interview you.
Go FnF!
Some different posts probably including one of my copy/paste articles were estimating 4-7 billion. I have no idea what that was based on. It would be great if your algo is accurate.
Go FnF!
Key points in the financial crisis, 11 years after Lehman's failure
Eleven years ago, after more than a century in business, investment bank Lehman Brothers collapsed in the largest corporate bankruptcy in history, forcing the U.S. government to take unprecedented steps to protect the financial system.
The bank’s demise brought to a head a financial crisis fueled by the end of a bubble in the $15 trillion mortgage market, dealing a catastrophic blow to the U.S. economy. Unemployment surging past 10 percent, and trillions of dollars in market value was wiped out. Tens of thousands of Americans lost their homes to foreclosure, including more than 800,000 in 2008 alone, according to RealtyTrac data.
The U.S. government responded by pumping in $1.5 trillion in stimulus over a five-year period to help keep leading financial institutions afloat and maintain liquidity in financial markets. The Federal Reserve slashed interest rates to nearly zero to encourage spending and went on a bond-buying spree that more than quadrupled the size of its balance sheet.
Here's a closer look at some of the key events during the period, one of the rockiest economically in American history:
Sept. 7, 2008: The Bush administration took control of troubled mortgage giants Fannie Mae and Freddie Mac, placing them in a conservatorship by the Federal Housing Finance Agency and removing their top executives in order to keep the nation’s housing market afloat. The companies, which owned about $5 trillion in home loans, buy mortgages from banks and package them into securities that they either hold or sell to U.S. and foreign investors.
Sept.15, 2008: Lehman filed for Chapter 11 bankruptcy protection, the largest such filing in U.S. history. The company shuttered its doors with more than $600 billion of debt and more than 100,000 creditors. The bankruptcy triggered a 500-point plunge in the Dow Jones Industrial Average, the largest one-day decline since the Sept. 11 attacks.
Sept. 17, 2008: The U.S. government seized control of American International Group, one of the world’s biggest insurers, in an $85 billion bailout, a historic and dramatic attempt to avert a potentially devastating bankruptcy.
Sept. 21, 2008: Goldman Sachs and Morgan Stanley, two of the nation’s most successful investment banks, sought protection from the financial crisis by applying to become regular commercial banks.
Oct. 3, 2008: President George W. Bush signed the Troubled Asset Relief Program, known as TARP, allowing the Treasury Department to inject money into banks, some of which were imperiled, so they could continue operating during the financial crisis. The U.S. government bought stock in eight banks: Bank of America/Merrill Lynch, Bank of New York Mellon, Citigroup, Goldman Sachs, JPMorgan Chase, Morgan Stanley, State Street and Wells Fargo -- in an investment commonly referred to as the “bank bailout.” Initially, the program authorized the government to spend $700 billion, but that amount was reduced to $475 billion when the Dodd-Frank Act was signed into law in 2010.
https://www.foxbusiness.com/economy/the-collapse-of-lehman-brothers-a-closer-look-at-key-events-in-the-financial-crisis.amp
So I have learned. WAG THE DOG!
GO FnF!
Damn I learn a little something every day. Many pref holders are holding short positions to keep the common price depressed long enough to get a quick recap and a better conversion. Sneaky but I can see it now. It probably was a good strategy for a long time.The stress and fear of getting burned must be awful at this point. It explains some of the posts. Getting burned on a big short position AND getting a lower conversion rate would suck. Prefs were supposed to be the safer bet, not the riskier bet!
Go FnF