Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Ackman’s proposal to reform FNMA and FMCC suggests possibly future value for them between $23 and $47 per share. And now, there is finally serious talk of reform going on in Congress.
REPORTING FOR 2019-09-04 | We have conducted a deep analysis of how Fannie Mae (FNMA) has been trading over the last 2 weeks and the past day especially. On its latest session, Fannie Mae (FNMA) opened at 2.77, reaching a high of 2.86 and a low of 2.77 before closing at a price of 2.84. There was a total volume of 2437537.
VOLUME INDICATORS: We saw an accumulation-distribution index of 10.172, an on-balance volume of -2.77, chaikin money flow of 1.0 and a force index of 0.0035. There was an ease of movement rating of -0.00035, a volume-price trend of 0.19561 and a negative volume index of 1000.0.
VOLATILITY: We noted an average true range of 0.08455, bolinger bands of 2.77, an upper bollinger band of 2.77, lower bollinger band of 2.77, a bollinger high band indicator of 1.0, bollinger low band indicator of nan, a central keltner channel of 2.8, high band keltner channel of 2.71, low band keltner channel of 2.89, a high band keltner channel indicator of 1.0 and a low band keltner channel indicator of 1.0. There was a donchian channel high band of 2.77, a donchian channel low band of 2.77, a donchian channel high band indicator of 1.0, and a donchian channel low band indicator of 1.0.
TREND: We calculated a Moving Average Convergence Divergence (MACD) of -0.00155, a MACD signal of -0.00064, a MACD difference of -0.00092, a fast Exponential Moving Average (EMA) indicator of 2.77, a slow Exponential Moving Average (EMA) indicator of 2.77, an Average Directional Movement Index (ADX) of unknown, an ADX positive of 20.0, an ADX negative of 20.0, a positive Vortex Indicator (VI) of 1.0, a negative VI of 1.0, a trend vortex difference of 0.73649, a trix of 5.8144, a Mass Index (MI) of 1.0, a Commodity Channel Index (CCI) of 66.66667, a Detrended Price Oscillator (DPO) of -0.1752, a KST Oscillator (KST) of 67.51965 and a KST Oscillator (KST Signal) of 67.51965 (leaving a KST difference of -4.28207). We also found an Ichimoku rating of 2.815, an Ichimoku B rating of 2.815, a Ichimoku visual trend A of 2.69938, an Ichimoku visual trend B of 2.6479, an Aroon Indicator (AI) up of 4.0 and an AI indicator down of 4.0. That left a difference of -8.0.
MOMENTUM: We found a Relative Strength Index (RSI) of 50.0, a Money Flow Index (MFI) of 100.0, a True Strength Index (TSI) of 100.0, an ultimate oscillator of 100.0, a stochastic oscillator of 100.0, a stochastic oscillator signal of 100.0, a Williams %R rating of 80.0 and an awesome oscillator of -0.00283.
RETURNS: There was a daily return of 6.75197, a daily log return of -1.82154 and a cumulative return of -1.80505.
Treasury Discussed Hiring Houlihan to Advise on Fannie-Freddie
https://finance.yahoo.com/news/treasury-discussed-hiring-houlihan-advise-145025653.html
GSE Treasury Plan Before Senate Banking Committee Meeting
https://seekingalpha.com/article/4289742-gse-treasury-plan-senate-banking-committee-meeting
A lot will hinge on Freddie, Fannie privatization plan
Housing bonds that help make U.S. multifamily dwellings more planet-friendly aren't yet seeing the kind of love they probably deserve, according to Cantor Fitzgerald.
U.S. housing giants Fannie Mae (FNMA), Freddie Mac (FMCC) and Ginnie Mae have encouraged landlords to take out loans to help retrofit older apartment properties in ways that save energy and water and lead to lower utility bills.
Landlords can qualify for lower interest-rate loans and additional proceeds to fund green improvements through Fannie (https://multifamily.fanniemae.com/financing-options/specialty-financing/green-financing/green-financing-loans) and Freddie (https://mf.freddiemac.com/product/green-advantage.html) lenders, while the U.S. Department of Housing and Urban Development (HUD) offers reduced mortgage insurance premiums to Ginnie borrowers, another big cost savings.
As a result, some $200 billion of green apartment loans and bonds have been created via the housing agency programs in the past decade as of 2018, according to public filings.
But as Cantor analysts suggest, that figure only scratches the surface of what is possible when considering the three housing agencies currently control a combined $690 billion multifamily loan book of business.
Darrell Wheeler, head of securitized strategy at Cantor Fitzgerald, estimates that only about 20% of the federally backed housing agencies' multifamily portfolio has been underwritten to greener standards.
But by greening the entire portfolio, Wheeler sees landlords saving roughly $20 billion annually on utilities, while tenants could save another 20% to 40% on top of that.
"There appears to be a lot of good coming out of these programs," Wheeler said in an interview with MarketWatch. But there has yet to be a flow-through of those benefits, in terms of better bond pricing or demand from ESG investors for the green agency bonds, he said.
Freddie Mac reported that its green program was expected to save 3.6 billion gallons of water last year at properties it helped finance, while Fannie Mae said tenants alone would likely save $72 million annually on utilities.
To qualify for Freddie's and Fannie's programs, a borrowing landlord must show a pathway to saving a minimum 30% in water and waste consumption at a property, with at least 15% of that total coming from reduced energy use.
The hitch? Despite the benefits, green bonds sold by the housing agencies have been achieving roughly the same pricing as regular ones without the eco-benefits. "They don't really price any differently," Wheeler said of the green bonds.
That means that, while borrowers benefit from lower loan coupons, the housing agencies have yet to see lower costs when they pool green housing loans into bonds.
The housing agencies, themselves, don't make property loans, but they do buy debt from lenders that fit their criteria and package them into bonds with government backing.
Government guarantees give the housing bonds a haven appeal akin to U.S. Treasury securities, which often provides the agencies a pricing advantage over private lenders.
The 10-year Treasury note's yieldtumbled to a near-three-year low (http://www.marketwatch.com/story/treasury-yields-slide-lower-as-brexit-worries-spur-demand-for-bonds-2019-09-03) on Tuesday of 1.469%, after weak U.S. manufacturing data stoked fears of a looming U.S. recession and against the backdrop of a more than 300-point drop in the Dow Jones Industrial Average (http://www.marketwatch.com/story/dow-futures-head-200-points-lower-as-china-us-trade-angst-set-to-start-september-on-a-sour-note-2019-09-03) .
Because Freddie, Fannie and Ginnie finance affordable housing, they also have taken a lead in reducing the carbon footprint of an important swath of the nation's multifamily properties.
Low-income communities are particularly vulnerable to climate change and extreme weather events, in part because many affordable rental properties have been located in flood-prone areas, according to a new report from the Center for American Progress, (https://www.americanprogress.org/issues/green/reports/2019/08/01/473067/a-perfect-storm-2/) a policy institute with a liberal viewpoint.
Without a clearer pricing advantage on green bonds, there are no guarantees that the U.S. housing agencies will continue prioritizing planet-friendly housing finance.
The Trump administration is expected to unveil soon its plans to privatize Freddie and Fannie, which a decade ago were taken into conservatorship in the wake of the global financial crisis. More details are expected on the privatization front (https://www.wsj.com/articles/fannie-and-freddie-plan-is-likely-next-month-11566432606?mod=mktw) in early September, according to the Wall Street Journal.
Wheeler said a lot about Freddie and Fannie's green initiatives could hinge on what the privatization plan looks like. "It's the wild card," he said.
WASHINGTON, Sept 4 (Reuters) - The Trump administration's blueprint for reforming the U.S. housing system is expected to be unveiled in the coming days, according to Washington analysts, marking a key step towards overhauling mortgage giants Fannie Mae and Freddie Mac.
Fannie and Freddie have been in conservatorship since they were bailed out by the government during the 2008 financial crisis. Washington has since struggled to get them back on their feet, with a 2012 Obama-administration plan falling flat.
In March, the Trump administration said it would devise a new plan to free the mortgage companies from U.S. government control, which Reuters reported in July would come by this month.
On Tuesday, the U.S. Senate Banking Committee said it would hold a hearing Sept. 10 on the next steps for housing finance reform, in what analysts saw as a signal the report would likely come by Friday.
"Scheduling this hearing is a definitive signal that the release of the Trump administration's mortgage reform plan is imminent," Isaac Boltansky, director of policy research at Washington-based Compass Point Research & Trading wrote in a note on Wednesday.
He said the report and the hearing were, among other expected moves, "meaningful mile markers in the road to ending" Fannie and Freddie conservatorships.
A Treasury spokesman declined to comment.
The Treasury holds warrants representing 80% of Fannie and Freddie's common stock, as well as senior preferred stock. Under the current terms of the preferred stock agreement, Treasury is guaranteed a 10% dividend and sweeps the firms' quarterly net profits into its coffers. That arrangement has left Fannie and Freddie with just around $3 billion of capital each.
The report is expected to outline the conditions for safely removing Fannie and Freddie from their government lifeline, including both legislative and administrative proposals. It is likely to include a plan to set about rebuilding the firms' capital buffers by, among other measures, ending the quarterly net profit sweep.
It is also expected to recommend the creation of an explicit guarantee for the pair's securities, and to explore ways to streamline their businesses.
With Fannie and Freddie guaranteeing more than half the nation's mortgages, any plan is likely to be closely scrutinized by Democrats and consumer groups who may be concerned an overhaul would push up mortgage rates and housing costs.
In recent months, the administration has also tempered expectations for a speedy overhaul of Fannie and Freddie, with Mark Calabria, director of the Federal Housing Finance Agency which controls the two mortgage giants, telling Reuters in July he hoped the pair would be ready to exit conservatorship within five years.
Treasury Secretary Steven Mnuchin, who has led the push for reforming Fannie and Freddie within the administration, is "juggling a number of balls," Calabria said at the time, including the ongoing trade dispute with China and debt ceiling negotiations with Congress. (Reporting by Michelle Price; Editing by Bernadette Baum)
Well goodie for you!
MReport Sept. 02 2019 10 Step to reform
The government-sponsored enterprises (GSEs) have been in conservatorship for more than 10 years. During that time, three presidential administrations, four Federal Housing Finance Agency (FHFA) Directors, and seven different congresses have grappled with the seemingly herculean task of bringing Fannie Mae and Freddie Mac out of conservatorship and completing housing finance reform.
While the public debate has often envisioned and emphasized the need for legislative action, that avenue has been, and continues to be, an uphill battle in an unprecedented partisan political landscape. Still, stable growth in the housing market, strong employment, and the potential for rising interest rates point to the increasing need to establish a “new normal” for housing finance.
The Trump administration has tapped regulators to take a fresh look at the options available to get momentum moving in the right direction. Published in March, the White House’s Memorandum on Federal Housing Finance Reform directs the Treasury Department, in consultation with other key housing regulators, including the FHFA, the Department of Housing and Urban Development (HUD), and the Consumer Financial Protection Bureau (CFPB), to develop a blueprint for reform.
The memo not only outlines broader national housing policy priorities but shines a light on the influential role that regulators can play in driving significant components of housing finance reform in the absence of congressional consensus. The 10 requirements regulators have been tasked with represent a toolbox of policy authority that, when drawn upon, can accomplish significant progress, leaving a final few select measures up to Congress.
As FHFA Director Mark Calabria said before the Mortgage Bankers Association Secondary Market Conference in May, “The perspective in the past that we must wait on Congress is not one I share. There are a number of things I can’t do, where we need congressional authority, but there are a number of things I can do.” Treasury Secretary Steven Mnuchin expressed a similar sentiment in a CNBC interview in February, saying the administration preferred bipartisan legislative action, but “if that doesn’t work, we have administrative tools that we can [use to] make moves in housing.”
As President Trump’s memo makes clear, there are at least 10 ways regulators can lay the groundwork for reform.
The memo mandates the regulatory proposal for housing finance reform end conservatorship, facilitate competition in mortgage lending, establish regulations of the GSEs going forward, and ensure the government is compensated for support of the secondary housing finance market. The memo sets forth the following objectives to advance these priorities:
Step 1: Preserve the 30-year Fixed-Rate Mortgage
Unsurprisingly, maintaining access to the 30-year fixed-rate mortgage—the hallmark of the U.S. housing market and the impetus for chartering the GSEs in the first place—tops the list. Regulators are tasked with preserving this product and other affordable mortgage options that “best serve the financial needs” of qualified homebuyers.
At times during the decade-long debate on housing finance reform, certain industry stakeholders have disagreed on the need for the government to guarantee the availability of the 30-year mortgage and asserted that private lenders and others who securitize mortgagebacked securities (MBS) could sustain access to this product on their own while also offering competitive interest rates.
Calabria has argued against the necessity of the 30-year mortgage in the past, but recently has expressed a more open position, saying during his nomination hearing before the Senate Banking Committee, “It is indeed possible for us to have a well-capitalized, strong system that preserves the 30-year mortgage.”
With Calabria, the Trump administration, and most of the mortgage industry aligned on this objective, the release of the GSEs and/or the design of a new guarantee structure is more than likely to incorporate requirements to sustain securitization of the 30-year mortgage by continuing to match mortgage lenders with investors that can manage the long-term interest rate risks associated with a 30-year product.
Step 2: Maintain Equal Access for Lenders
Today the GSEs play a central role in providing liquidity that is accessible to lenders of all sizes, charters, and geographic locations. In 2017 and 2018, Fannie Mae and Freddie Mac originations represented just under 50% of total volume, according to the Urban Institute. Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) originations account for about a quarter of total volume, and portfolio originations make up another 30%. Prior to conservatorship, private-label securities (PLS) accounted for roughly one-third, to as much as half, of all originations.
Restoring a healthier and more competitive mix of securitizations, one not entirely dependent on GSE and government-backed securitization, would contribute to a more functional mortgage market that meets the needs of all lenders. Before the Mortgage Bankers Association, Calabria said, “I’m a big believer in competition.”
Among the specific components required to maintain access for smaller lenders is the preservation of the TBA market model and the cash window for loan sales. In releasing Fannie Mae and Freddie Mac, the ability for smaller lenders to continue to deliver into the TBA market, bypassing the volume requirements for “specified pool” markets, should remain unchanged. Maintaining the GSEs respective cash windows for the outright purchase of single loans is extremely important for the stability of small and even mid-sized lenders. When delivering loans through an aggregator are added to allowing direct investor delivery
without incurring the pricing and product impairments, the cash window creates securitization access in an environment that minimizes market risk for smaller market participants.
Step 3:Establish New Capital Standards
Calabria has been vocal about the importance of setting and achieving appropriate levels of capital and liquidity, saying in May, “It was insufficient capital that triggered the conservatorship, and it’s going to be sufficient capital that triggers an exit.”
FHFA is in the process of once again reviewing the GSEs’ current capitalization, but Calabria has said that “step one” will be to end the current net worth sweep of Fannie Mae and Freddie Mac’s earnings.
This measure alone, however, is not expected to build capital fast enough to align with the administration’s timeline. FHFA is considering other options, including raising capital through initial public offerings (IPOs) and hopes to begin implementing new capital building measures by January 2020.
Although no specific levels have been established, a suitable capital requirement threshold has been the source of industry, regulatory, and congressional debate for years. “With a leverage ratio of nearly one thousand to one, the GSEs’ balance sheet capital cushion is razor-thin relative to their huge amount of assets,” Calabria said at the Secondary Market Conference. “As a regulator, my primary concern is that the GSEs maintain capital levels commensurate with their risk profiles,” he added and suggested Fannie Mae and Freddie Mac should be subject to the same capital requirements as large financial institutions.
Congress has occasionally weighed in on the issue. Senators Mark Warner (D-Virginia) and Bob Corker (R-Tennessee) proposed the Housing Finance Reform and Taxpayer Protection Act, one of the first major bipartisan legislative proposals for housing finance reform, envisioned a 10% capital requirement. The Urban Institute estimates that a level of 4-5% would have adequately sustained the GSEs through incurred losses from the financial crisis.
Regulators need to agree on the appropriate capital level in order to finalize a risk-based capital rulemaking. This critical step “needs to be finished before there’s an exit,” Calabria told Politico earlier this year.
Step 4: Charter New Guarantors
Several proposals for housing finance reform, including Senate Banking Committee Chairman Mike Crapo’s (R-Idaho) outline and the Mortgage Bankers Association’s white paper, have suggested privatizing the GSEs and allowing new additional private guarantors to compete with them.
The inclusion of this priority in the White House’s memo reflects a shared interest in pursuing an expansion of the number of mortgage guarantors. Legislation would be required to provide FHFA with the authority to issue charters to new guarantors. A new chartering authority would allow FHFA to move away from Fannie Mae and Freddie Mac’s current duopoly. Calabria said, “When it comes to housing, competition would make the system more stable. If there were 10 GSEs instead of two, it’s unlikely any of them would be ‘too big to fail.’”
Step 5: Curtail the GSE Footprint
Right-sizing Fannie Mae and Freddie Mac’s collective footprint in the housing market has been one of FHFA’s primary objectives since conservatorship. This is also one of the only lingering reforms not addressed by the Dodd-Frank Wall Street Reform and Consumer Protection Act’s (Dodd-Frank) mandate to end “too big to fail.” Reigning in the GSEs’ market share is contingent on the successful execution of some of the other objectives laid out by the White House, including reevaluating multifamily market participation, the Qualified Mortgage (QM) patch, and affordable housing.
There are several avenues that FHFA could pursue to reduce the GSEs’ current origination volume directly. Eliminating or reducing participation with certain products, including larger loan sizes, investor or second homes, and cash-out refinances, is a commonly discussed option to cut down market share tactically. Some of these products arguably do not serve the GSEs original mandate and make up nearly one-third of their total volume (cash-out refinances accounting for 20% and second homes accounting for 10%).
FHFA also can reduce GSE loan limits to curb the concentration of larger balance mortgages, but this step would likely require amendments to the Housing and Economic Recovery Act (HERA). Raising g-fees or tightening credit underwriting requirements is another viable alternative for motivating new competition from PLS securitizers and curtailing GSE volume.
Step 6: Choose the Appropriate Size of Retained Portfolios
The retained portfolios of Fannie Mae and Freddie Mac have been gradually reduced under the direction of FHFA since conservatorship. The senior preferred stock purchase agreements (PSPAs) between Treasury and the GSEs established a schedule for 15% annual reductions in retained portfolios. The PSPAs also instituted a $250 billion cap that became effective this year. Both Fannie Mae and Freddie Mac are working on executing FHFA’s approved retained portfolio plans to maintain the cap, even under adverse conditions. Through these actions, FHFA has reduced the volume of mortgage purchases for investment while maintaining securitization volume.
Under conservatorship, FHFA has specifically focused on the reduction of riskier retained mortgage portfolios, which were down to $484 billion by the end of 2017, compared to $1.6 trillion in 2008. FHFA will continue to maintain restrictions on the GSEs’ retained mortgage and investment portfolios and propose reasonable standards for the GSEs post-conservatorship as part of the regulatory framework for housing finance reform.
Step 7: Define the Role of GSEs in Multifamily
In addition to a substantial market share in single-family mortgage originations, the GSEs have grown their footprint in multifamily mortgage lending since the financial crisis. Multifamily mortgage originations have increased as a whole, from around $150 billion in 2007 to a projected $324 billion in 2019, according to Freddie Mac. Before the financial crisis, the GSEs only accounted for about a quarter of multifamily mortgage originations. However, they now represent nearly half of the market’s volume.
Lawmakers, including Sen. Crapo, have been eager to revisit the scope of the GSEs’ involvement in this area as well. Crapo’s outline proposes selling Fannie Mae and Freddie Mac’s multifamily businesses to be operated as independent guarantors. The multifamily industry has pushed back against a dramatic wind down in the GSEs’ role in the market, arguing they play an essential role in supporting the unique needs of rising apartment lending.
FHFA’s 2018 Scorecard Progress Report, released in April, outlines a $35 billion cap to be placed on the volume of new multifamily business that each GSE can take on. Importantly, FHFA has chosen to exclude affordable and underserved market segments from the cap requirements.
Step 8: Evaluate the QM Patch
The original GSE patch for QM requirements will end in January 2021 or when Fannie Mae and Freddie Mac come out of conservatorship—whichever comes first. The CFPB is working in consultation with other regulators to determine whether to allow the patch to expire, temporarily extend its provisions, or revisit the Ability-to-Repay/QM rulemaking altogether. How the CFPB decides to proceed with the patch, which extends safe harbor protections for GSE loans even though they do not meet the regulatory QM requirements, will likely align with the path of housing finance reform.
The CFPB’s Spring 2019 Rulemaking Agenda explains that the GSE patch is currently under review. “After further policy analysis,” the CFPB said it will “determine whether rulemaking or follow up activity is appropriate.” Bob Broeksmit, President and CEO of the Mortgage Bankers Association, told American Banker, “Not doing something to extend the patch would be highly disruptive.”
The GSE patch, however, has been linked to the growth of the GSEs’ footprint, in conflict with other objectives from the White House memo. The CFPB recently conducted an assessment of the Ability-to-Repay/QM rule saying, the “continued prominence” of originations covered by the GSE patch “is contrary to the Bureau’s expectations at the time of the rulemaking.” The CFPB continued, “The scope of GSE-eligible loans is broad and grew broader for a period of time after the rule became effective as the GSEs loosened the credit eligibility.” Investors have also gravitated to GSE loans with QM protections in lieu of non-QM originations. As a result, the CFPB said, the PLS market “remains quite small,” which “limits the funding available” for non-QM loans.
Further extending the GSE patch would allow Fannie Mae and Freddie Mac to continue these trends and risks further disincentivizing PLS growth in non-QM originations. Eliminating the GSE
patch—assuming the Fannie Mae and Freddie Mac would slow or halt their purchase of non-QM loans without safe harbor protections—would have a significant impact on GSE origination volume. Redwood Trust estimates that between 25-30% of mortgages purchased by the GSEs would be considered non-QM in the absence of the patch.
This reduction would certainly contribute to curtailing the GSE footprint. According to Redwood Trust’s analysis, the private market could absorb as much as 70% of the GSEs current non-QM volume. This transition would also help the mortgage market achieve a healthier blend of non-QM and legitimate QM products, fulfilling the original intention of the CFPB’s rule.
Step 9: Direct the GSEs; Role in Affordable Housing
FHFA, in coordination with other regulators, including HUD and Treasury, will need to define what measures, if any, will be used to quantify the GSEs’ role in promoting affordable housing. The White House has asked regulators to define the role for the GSEs “without duplicating support provided by the FHA and other federal programs.” To this end, it is important that HUD is involved in mapping out the placement of multiple federal programs, in addition to the GSEs’ post-conservatorship space in affordable housing.
Crapo’s outline envisions replacing the current affordable housing goals and duty-to-serve requirements with a Market Access Fund. This fund would extend grants, loans, and rental assistance to advance affordable options for low-income households and communities.
The affordable housing mission, mandated by Congress in 1992, was one approach to engaging the GSEs in the extension of affordable mortgage credit. Reinvigorating competition and longer-term predictability to the mortgage market may also help achieve a better balance of credit availability. As discussed with other objectives, limiting certain products, such as larger balance loans and investor and second homes may narrow the GSEs’ focus on more low- and moderate-income households.
Step 10: Set Conditions for Ending Conservatorship
While FHFA has arguably been working on setting the conditions to end conservatorship for 10 years, finally actualizing the release of Fannie Mae and Freddie Mac will require agreement on the appropriate measures of success. Calabria said that achieving “an excess of capital” will be the ultimate threshold for release. “The path out of conservatorship that we will establish for Fannie and Freddie is not going to be calendar dependent. It will be driven, first and foremost, by their ability to raise capital,” he said. If one GSE becomes ready for privatization before another, FHFA will consider releasing them out of conservatorship at different times.
Regardless of the timing, the White House has stipulated that upon the termination of conservatorship, Treasury and FHFA need to develop a mechanism that ensures the federal government is compensated for any explicit and implicit guarantee provided to the GSEs or their successors, specifically “in the form of an ongoing payment” to the U.S. The White House has also called on regulators to ensure that, incorporating many of the priorities listed above, the GSEs’ post-conservatorship missions and portfolios are appropriate. Regulators must additionally outline a vision for heightened prudential and safety and soundness requirements for the next generation GSEs, “designed to prevent future taxpayer bailout and minimize risks to financial stability.”
Great Expectations
As a host of new housing leaders, including Calabria, Mnuchin, Kathy Kraninger, Director, CFPB, Ben Carson, Secretary, HUD, and Brian Montgomery, FHA Commissioner, coalesce around the tools at their disposable, the mortgage industry should finally expect to see gradual steps taken towards housing finance reform. Calabria has tellingly promised, “If there’s one thing I know for sure it’s that Fannie and Freddie will look much different at the end of my five-year term than they do today.”
More than ten years after the financial crisis, the mortgage industry certainly understands Calabria’s sentiment, “The status quo is no longer an option.” After executing the objectives set forth by the Trump administration, regulators have assured that Congress will be provided ample time to consider the housing finance reform framework and take any remaining necessary legislative steps to conclude their efforts. Between now and Congress’ eventual action, regulators have a long runway to get housing finance reform off the ground—once and for all.
REPORTING FOR 2019-09-04 | We have conducted a deep analysis of how Fannie Mae (FNMA) has been trading over the last 2 weeks and the past day especially. On its latest session, Fannie Mae (FNMA) opened at 2.77, reaching a high of 2.86 and a low of 2.77 before closing at a price of 2.84. There was a total volume of 2437537.
VOLUME INDICATORS: We saw an accumulation-distribution index of 10.172, an on-balance volume of -2.77, chaikin money flow of 1.0 and a force index of 0.0035. There was an ease of movement rating of -0.00035, a volume-price trend of 0.19561 and a negative volume index of 1000.0.
VOLATILITY: We noted an average true range of 0.08455, bolinger bands of 2.77, an upper bollinger band of 2.77, lower bollinger band of 2.77, a bollinger high band indicator of 1.0, bollinger low band indicator of nan, a central keltner channel of 2.8, high band keltner channel of 2.71, low band keltner channel of 2.89, a high band keltner channel indicator of 1.0 and a low band keltner channel indicator of 1.0. There was a donchian channel high band of 2.77, a donchian channel low band of 2.77, a donchian channel high band indicator of 1.0, and a donchian channel low band indicator of 1.0.
TREND: We calculated a Moving Average Convergence Divergence (MACD) of -0.00155, a MACD signal of -0.00064, a MACD difference of -0.00092, a fast Exponential Moving Average (EMA) indicator of 2.77, a slow Exponential Moving Average (EMA) indicator of 2.77, an Average Directional Movement Index (ADX) of unknown, an ADX positive of 20.0, an ADX negative of 20.0, a positive Vortex Indicator (VI) of 1.0, a negative VI of 1.0, a trend vortex difference of 0.73649, a trix of 5.8144, a Mass Index (MI) of 1.0, a Commodity Channel Index (CCI) of 66.66667, a Detrended Price Oscillator (DPO) of -0.1752, a KST Oscillator (KST) of 67.51965 and a KST Oscillator (KST Signal) of 67.51965 (leaving a KST difference of -4.28207). We also found an Ichimoku rating of 2.815, an Ichimoku B rating of 2.815, a Ichimoku visual trend A of 2.69938, an Ichimoku visual trend B of 2.6479, an Aroon Indicator (AI) up of 4.0 and an AI indicator down of 4.0. That left a difference of -8.0.
MOMENTUM: We found a Relative Strength Index (RSI) of 50.0, a Money Flow Index (MFI) of 100.0, a True Strength Index (TSI) of 100.0, an ultimate oscillator of 100.0, a stochastic oscillator of 100.0, a stochastic oscillator signal of 100.0, a Williams %R rating of 80.0 and an awesome oscillator of -0.00283.
RETURNS: There was a daily return of 6.75197, a daily log return of -1.82154 and a cumulative return of -1.80505.
It's on Cabotwealth
NEW YORK/WASHINGTON (Reuters) - The Trump administration’s hotly anticipated blueprint for overhauling mortgage guarantors Fannie Mae and Freddie Mac may not be published in September as the U.S. Treasury juggles several other pressing issues, the housing regulator told Reuters.
Mark Calabria, director of the Federal Housing Finance Agency (FHFA), which oversees the government-sponsored enterprises, said in an interview it was his “hope” that they would have exited or be ready to exit conservatorship before his term ends in 2024
However, Calabria is not operating toward a hard deadline, he noted.
“That’s my time horizon,” he said, referring to the end of his term. “I’m under no expectation to try to get all this done. ... So if in four years, nine months they’re not out of conservatorship, I’m not pushing them out.”
Calabria’s comments will temper market expectations for a speedy overhaul of Fannie and Freddie before the 2020 presidential election.
Fannie and Freddie, which guarantee over half of all U.S. mortgages, have operated under government conservatorship since their bailout during the 2008 subprime mortgage crisis. Washington has struggled for years to devise a plan to safely return them to the private sector.
The Trump administration has said it is eager to push ahead with housing finance reform and industry analysts and insiders had expected a Treasury-led proposal for removing them from conservatorship to be published by the end of this year. Calabria said the report was “essentially done,” that he had seen a draft, and expected it to be published in the coming months.
Treasury Secretary Steven Mnuchin, who has led the push for reforming Fannie and Freddie within the administration, is “juggling a number of balls,” Calabria said. Mnuchin is involved in the ongoing trade war with China, debt ceiling negotiations with Congress and imposing sanctions on Iran. Craig Phillips, Mnuchin’s adviser who had been closely involved in the reform plan, also left in June.
Despite his heavy workload Mnuchin continues to work with his team on housing finance issues on a weekly basis, a person familiar with the matter told Reuters.
Calabria said he expected the Treasury will in the report back some form of government guarantee for Fannie and Freddie. But he said he planned to advocate for a guarantee limited to the mortgage-backed securities issued by the pair, rather than a government backstop for the companies themselves.
That would be nice, I could take some profit and buy the land I'm looking at.
I say C also, should be a good day to flip though
Fox Business Video
https://www.foxbusiness.com/economy/trump-fannie-freddie-overhaul
Thanks, the one's they make these days should be rated PG and are horrible
Trump's Fannie, Freddie overhaul on the way: What to know
Americans might soon learn how the Trump administration wants to reform the housing finance system.
The administration is expected to release its plan to overhaul mortgage giants Fannie Mae and Freddie Mac as soon as the beginning of next month, people familiar with the matter told The Wall Street Journal.
The plan will reportedly detail how the administration would remove the government-sponsored entities (GSEs) from conservatorship – a long-time goal of the Trump administration – if Congress doesn’t overhaul them in the meantime.
Sources told the Journal that the blueprint will include plans to make sure the entities have enough capital to absorb losses, before returning operations to the way they were before the financial crisis. It is not expected to address a potential initial public offering (IPO).
A broader overhaul of the housing finance system to create more competition, however, would likely require action from Congress.
“I’m expecting that Treasury and the administration will lay out their vision of what they think Congress should do, what they think I should do and what they think the Treasury and I should be able to do together in terms of amendments to the share agreements that allow an exit out of conservatorship,” Federal Housing Finance Agency Director Mark Calabria told HousingWire.
The administration’s other reform goals include improving access to sustainable mortgages, preserving the 30-year fixed-rate mortgage and enabling access to federal housing programs to help finance the purchase of first homes.
It has been more than a decade since Fannie and Freddie were taken into conservatorship. They have been operating within the government since being bailed out for nearly $200 billion at the height of the financial crisis.
The two government-sponsored enterprises do not originate loans – instead they purchase and guarantee them on the secondary market.
President Trump directed the Treasury Department and Department of Housing and Urban Development to develop policy recommendations for ending the conservatorship of Fannie and Freddie in March.
Privatizing the entities has been a longtime goal of U.S. Treasury Secretary Steven Mnuchin, who told FOX Business in November 2016 that the administration had to “get them out of government control.”
Taking Fannie Mae and Freddie Mac out from under government control could be a boon to shareholders – who have essentially had shares wiped out. As of 2012, profits from Fannie and Freddie have been redirected to the U.S. Treasury, in what’s known as a net worth sweep. Some hedge funds, however, have been betting on their return to the private sector.
Calabria told FOX Business in May that he’s considering an IPO of Fannie and Freddie as early as the first half of 2020 in order to raise capital.
Probably be a lot of buying towards close today
I don't know if anyone else was watching CNBC at 5:00 A.M. today when they were saying this could be a huge weekend for the housing market, but would not give any reason to why they're saying that.
Is the En Banc ruling today?
It was posted at 5:30 today on Think or Swim
The Trump administration is close to releasing a blueprint for overhauling Fannie Mae and Freddie Mac, two companies that back half of the nation's $10 trillion mortgage market. The firms have been in government conservatorship since the 2008 financial crisis, and administration officials say it is time to return them to the private sector.
The plan, expected shortly after Labor Day, will outline how the administration hopes to put the companies on more-solid financial footing and return them to private-shareholder ownership. Making those changes remains politically, technically and legally difficult, and prior efforts have all sputtered.
Just who are Fannie and Freddie?
The two companies, based in Washington, D.C., and McLean, Va., are government-sponsored enterprises, or GSEs, in government lingo. Their function is critical to U.S. housing and mortgage markets. Fannie and Freddie don't make loans, but instead buy them from banks and other lenders. They package them into securities that are sold to other investors and provide guarantees to make those investors whole should loans default.
Investor demand for the securities is strong because the companies are currently backstopped by the U.S. government. They are required to send most of their profits to the Treasury in exchange for that support.
The companies are central to the popular 30-year mortgage, which locks in steady payments for buyers.
Why do Trump officials think the firms need fixing?
The Trump administration and lawmakers in both parties generally don't believe the government should be running in effect two enormous financial companies. Administration officials want to shrink the government's involvement and return housing finance to a privately run system. Requiring the companies to have a much larger capital cushion to absorb losses would reduce taxpayer risk.
What does it mean for your mortgage?
Requiring Fannie and Freddie to hold bank-like levels of capital could force the companies to raise the fees they charge to guarantee loans, possibly leading to higher mortgage costs. Additional limitations on the types of loans they can purchase -- for second homes or cash-out refinancings, potentially -- would push some borrowers into the private market. Private lenders may be pickier about whom they lend to and sell loans that are more expensive than those that meet Fannie and Freddie standards.
As with any government plan, much will depend on how it is implemented. Taking the lead will be Mark Calabria, Fannie and Freddie's new federal regulator, in consultation with Treasury. Mr. Calabria's term lasts until 2024, so he will be heading the overhaul even if power changes hands in early 2021.
Who are the likely winners?
Privatizing the firms could be a victory for hedge funds and other investors that bet years ago on Fannie and Freddie's return to the private sector. Depending on how the government recapitalizes the companies, these investors -- including mutual-fund giant Capital Group Cos. and hedge funds Blackstone Group's GSO Capital Partners LP and Paulson & Co. -- could see windfall profits. The U.S. also could get a windfall if it elects to sell its large stake in the companies, as some investors are urging the government to do. Details for how shareholders would be treated in any privatization would likely be settled over the coming years, not necessarily in the coming Treasury report.
Whose action is required?
Congress would need to act on an overhaul that opens the system to new competitors and create a federal guarantee for securities issued by Fannie and Freddie -- as well as those issued by any new housing-finance companies. But the chances of lawmakers acting are slim. Mr. Calabria and other administration officials have the authority to act on their own to end the conservatorship, but that means working within the existing system -- that is, they would be stuck with Fannie and Freddie.
What does Congress think?
Lawmakers in both parties may object to the administration sidestepping Congress to end the conservatorship. Sen. Sherrod Brown (D., Ohio) has warned the administration's forthcoming plan "could risk destabilizing the economy." Republican critics won't like that the firms' effective duopoly will remain intact if the companies are privatized administratively. "It's far preferable to do something legislatively," said Douglas Holtz-Eakin, president of the American Action Forum.
What about the housing and mortgage industries?
Bankers, realtors and investors that purchase the companies' mortgage-backed securities, or MBS, may be reluctant to embrace any plan that ends the conservatorship without congressional involvement. They say efforts to privatize the firms administratively increases uncertainty over how the companies will be backstopped, which could ultimately raise mortgage costs.
"The report is likely going to have a lot of language about embracing congressional reform and reducing the GSE footprint, which most market participants support. But if the real intent is to end conservatorship administratively, then the MBS market will react very negatively," said Michael Bright, chief executive of the Structured Finance Association.
Will a full overhaul happen?
It is too soon to say. The plan is being introduced as the 2020 presidential election cycle gets under way, rarely a window for sweeping bipartisan change in Washington. Several past efforts have failed to get off the ground. While they prefer that Congress acts, Trump administration officials say they are serious about ending the conservatorship even absent congressional action. Privately they have said they would like to reduce Fannie and Freddie's loan footprint to between 30% and 40% of the market, according to people familiar with their discussions
I Agree, people are not going to be doing a lot of selling this week in anticipation of plan coming out and probably have a run up at Friday close.
WASHINGTON -- The Trump administration is preparing to release as early as the first part of September its long-awaited plan to return Fannie Mae and Freddie Mac to private-shareholder ownership, according to people familiar with the matter.
The proposal comes more than a decade after the government seized the mortgage-finance firms to save them from collapse. It would likely seek to put the companies on a sounder financial footing and then release them from government control if Congress doesn't enact a more fundamental overhaul in the meantime, these people said.
The plan, which could be floated shortly after the Labor Day holiday, is expected to envision a version of what has been called "recap and release," which would ensure the firms have adequate capital to absorb loan losses in a future housing slump. Its provisions aren't expected to give details for initial public offerings for the firms, the people said.
If the proposal is carried out, the firms could ultimately return to the way they operated before the financial crisis. While administration officials would prefer that Congress act on a more sweeping overhaul of housing finance, Republican control of the Senate and Democratic control of the House leaves lawmakers unlikely to act. The firms are unlikely to face new competition because only Congress can create a more-level playing field that could break up the firms' effective duopoly.
Any move to recapitalize and then release the firms would be a victory for hedge funds and other investors that have been betting on Fannie and Freddie's return to privatization for years. Privatizing them would likely take several years and would involve allowing the firms to retain earnings and raise tens of billions of dollars from investors.
The plan, a priority for the Treasury Department, has been in the works for months and was expected earlier this summer. Its completion was delayed in part by revisions from the Department of Housing and Urban Development, the people said. Craig Phillips, a former top Treasury official who had been leading that department's work on the proposal, left in June.
Fannie and Freddie don't make loans but instead buy them from banks and other lenders. They package them into securities that are sold to other investors and provide guarantees in the event of default.
The firms got into trouble during the financial crisis by taking on more risk without having to hold more capital. They amassed huge investment portfolios to profit from the difference between their lower cost of capital -- a benefit of an implied federal guarantee -- and the rates they could earn on mortgages.
The government seized the companies through a process known as conservatorship in 2008, during the George W. Bush administration, and agreed to inject an amount to support some $5 trillion in debt securities issued by the companies.
As part of the plan to return Fannie and Freddie to private hands, a Treasury backstop could remain. But the firms could begin paying a periodic commitment fee for the federal line of credit, The Wall Street Journal previously reported.
New Fairholme vs. Fannie Filing
https://gselinks.com/wp-content/uploads/2019/08/13-cv-01053-110.pdf
Peter Chapman writes, “In a reply delivered to Judge Lamberth yesterday, Fairholme reminds the court “Treasury [has a] starring role in matters concerning the Net Worth Sweep,” the subpoena is designed to avoid production of documents previously produced, and Treasury’s conclusory parroting of discovery-related buzzwords — rather than sharing facts — fails to demonstrate any undue burden. ”
Also rated 8th out of their 255 #1 ranked stocks
Zack's has raised their ranking from 3 to 1 today on FNMA
Fannie Mae Predicts Two Additional 2019 Rate Cuts
http://www.mortgagenewsdaily.com/08192019_fannie_mae_forecast.asp
I don't know what you're looking at, but it's dated June 30th
Watch out, I posted an article from Akman last week that was from July and all I got was smart Azz comments about posting an old article, and that this forum was only up to the minute post
I've been accumulating FNMA since 2012, even if for some unseen reason they're not released, I'm OK with it, it's already been a big winner over the years flipping it
Is FNMA A Penny Stock to Buy or Sell For August?
https://pennystocks.com/featured/2019/08/06/penny-stock-to-buy-or-sell-august-fannie-mae-fnma/
Fitch Ratings-New York- 13 August 2019 : The expected release of the Treasury's plan to reform Fannie Mae and Freddie Mac will likely not result in near-term downgrades, says Fitch Ratings . The plan may provide insight on how the authorities may end the conservatorship of Fannie and Freddie along with proposals for comprehensive reform. However, any change to ratings would require a change in Fitch's view of support from the U.S. government, which we consider unlikely over the one- to two-year rating horizon.
Fannie Mae's and Freddie Mac's corporate debt ratings benefit from meaningful government support under the U.S. Treasury's Senior Preferred Stock Purchase Agreement (PSPA), which requires the Treasury to inject funds into Fannie and Freddie to ensure that they maintain positive net worth. Funding availability under these commitments is substantial - Fannie's and Freddie's availability under these commitments stood at $113.9 billion and $140.2 billion , respectively, as of 1Q19. These amounts represent 99% of Fannie Mae's and 213% of Freddie Mac's risk-based capital requirements that would be required under the FHFA's proposed capital rule released in June 2018 .
As long as Fannie and Freddie remain in conservatorship and continue to be supported by the substantial available funding under the PSPA, their ratings will continue to be linked to the U.S. sovereign rating. In the absence of a formal support agreement, Fannie's and Freddie's ratings would be based solely on Fitch's assessment of the stand-alone creditworthiness of the respective entities. Fitch estimates Fannie and Freddie's likely stand-alone rating could be in the 'A' to 'AA' category depending on the level of capitalization.
The reform plan is likely to include a path to end the net worth sweep with the Treasury and allow Fannie and Freddie to begin retaining capital as a step towards ending conservatorship. Fitch's base case assumption is that the PSPA funding availability for Fannie and Freddie would not change should the authorities allow them to begin building capital. In December 2017 , when the PSPA was amended to allow Fannie and Freddie to retain capital cushions of $3 billion , PSPA funding availability did not change. The Treasury and FHFA have the ability to amend the PSPA. However, if the PSPA were amended in a way that materially adversely affects Fannie's and/or Freddie's corporate debt or mortgage- backed security (MBS) holders, they are not permitted to decrease or add conditions to the funding commitment.
Fitch expects that the reform plan will likely include administrative steps that can be enacted by the FHFA and Treasury, as well as legislative options that would require Congressional approval. The Treasury has reiterated, on multiple occasions, its desire for reform to incorporate legislative solutions, which is viewed as unlikely in the current political environment. FHFA Director Calabria's desire for an explicit guarantee on Fannie and Freddie MBS would require Congressional approval.
While the Treasury is aiming to release its plan by September, Fitch believes that the timeline may be pushed back further to the extent that other priorities, such as trade negotiations, divert resources from GSE reform. FHFA's Calabria has continued to target reform; however, lack of bipartisan support could challenge Congress' ability to enact meaningful legislation. The FHFA's proposed capital rule announced in June 2018 under prior FHFA leadership remains outstanding, and Director Calabria has not indicated his view on the proposal.
Bill Ackman comment on common shares of FnF
Ackman to propose that there is a 1,000% to 1,500% upside possibility to the common shares of Fannie and Freddie
Why The Government Must Get Fannie And Freddie Out Of Conservatorship
https://www.valuewalk.com/2019/07/fannie-mae-out-of-conservatorship/
Bruce Berkowitz comments
https://www.gurufocus.com/news/923090/bruce-berkowitz-comments-on-fannie-mae
Always buy the dip...
There are many more thousands of people like them scamming and ripping off us tax payers.
Looks like shorts are almost done with all their buybacks...
FHFA Commissioner Mark Calabria discusses the future of Fannie Mae and Freddie Mac
With the Administration expecting to shortly unveil its plan to return Fannie Mae and Freddie Mac to private ownership, your reporters will undoubtedly be penning fresh articles in connection therewith. I caution you, however, to be on the lookout for certain “background” information which they might incorporate into their stories which is, at best, highly questionable.
I am referring to the oft-repeated inclusion of statements to the effect that Fannie Mae and Freddie Mac were “insolvent” and/or required a “taxpayer bailout” when they were seized and placed into conservatorship by the government in September of 2008. True, that was the justification provided to the press at the time. But subsequent, court-ordered, unsealed documents (which the government kept hidden for years) have raised very serious questions about the truthfulness of that explanation. Nonetheless, this false narrative has been routinely reported as fact by numerous journalists and commentators over the past decade – indeed, as recently as just last week.
I strongly urge that you spend a bit of time familiarizing yourself with one of those lawsuits, Washington Federal v. the United States. (An abbreviated and highlighted version can be found here)
https://documentcloud.adobe.com/link/track?uri=urn%3Aaaid%3Ascds%3AUS%3Af17d394b-bc6c-4574-90bd-2ab7f8643b91&cs-from=2680c960-52ba-4692-8677-a0706465f85c.
The factual history described in the Complaint is compelling, disturbing – and sworn under oath. While you will obviously have to draw your own conclusions, I believe it makes quite clear that the seizure of the GSEs wasn’t a bailout, it was a “stick-up”, just three days prior to being seized, they were able to tap the capital markets for $6 billion in unsecured debt in an over-subscribed offering. It was underwritten by the top-tier Wall Street investment banks. Clearly the markets (and the major Wall Street banks) didn’t think that either firm was “insolvent” or (as one well-known national publication just recently stated as a matter of fact) “teetering on bankruptcy”. (Reality check: who borrows $180 billion from Uncle Sam and can pay it all back – with interest – just four years later? Answer: someone who never needed the money in the first place!)