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https://www.housingwire.com/articles/fhfa-finalizes-rule-on-living-wills-for-fannie-and-freddie/
https://www.housingwire.com/articles/forbearance-slides-to-4-47-after-a-lackluster-week-of-exits/
https://www.cnbc.com/amp/2021/05/03/how-bidens-real-estate-tax-plan-may-hit-smaller-property-investors.html
5/3/2021
Final Rule on Resolution Planning for the Enterprises
BACKGROUND
The Federal Housing Finance Agency (FHFA) is publishing a final rule that requires Fannie Mae and Freddie Mac (the Enterprises) to develop plans that would facilitate their rapid and orderly resolution in the event FHFA is appointed as their receiver pursuant to 12 U.S.C. 4617 of the Safety and Soundness Act. A resolution planning rule, which gives effect to Congress’ intent in the Housing and Economic Recovery Act of 2008, is an important part of FHFA's ongoing effort to develop a robust prudential regulatory framework for the Enterprises, including capital, liquidity, and stress testing requirements, as well as enhanced supervision, which will be critical to FHFA’s supervision of the Enterprises particularly when they exit converservatorship.
The final resolution planning rule is similar to resolution planning rules issued by the Federal Reserve Board and the Federal Deposit Insurance Corporation under the Dodd–Frank Wall Street Reform and Consumer Protection Act, which require many large financial institutions to draft resolution plans and submit them to regulators. As with these large financial institutions, resolution planning for the Enterprises is critical to safeguarding the financial system and mitigating systemic risk. In 2019, for example, the Department of Treasury highlighted in its Housing Reform Plan the importance of a credible resolution framework for the Enterprises in protecting taxpayers against bailouts, enhancing market discipline, and mitigating moral hazard and systemic risk. Similarly, in 2020, the Financial Stability Oversight Council endorsed living wills for the Enterprises as a means of enhancing the Enterprises' regulatory framework.
Throughout the rulemaking process, FHFA has been committed to transparency to improve the proposed rule through public comment. The proposed rule was made available to the public beginning December 21, 2020 and published in the Federal Register on January 8, 2021. The comment period ended on March 9, 2021, 60 days after publication in the Federal Register. FHFA received 14 comments on the proposed rule. Public input has provided FHFA with important information to help refine and finalize the rule. As a result, the final rule includes several changes to the proposed rule.
FINAL RULE
The final rule requires each Enterprise to develop a resolution plan for submission to FHFA that would assist FHFA in planning for the rapid and orderly resolution of an Enterprise if FHFA is appointed receiver for the Enterprise pursuant to 12 U.S.C. 4617. The development of resolution plans will be an iterative process. The final rule preserves key components contained in the proposed rule:
Identification of core business lines – The rule establishes that the Enterprise resolution planning process would begin with identification of an Enterprise's "core business lines" (CBL) – those business lines of the Enterprise that plausibly would continue to operate in the limited-life regulated entity (LLRE). Identification of CBLs would include identification of associated operations, services, functions, and supports necessary for the CBL to be continued. Understanding CBLs will enable FHFA and the Enterprise to determine the operations of the LLRE, and what assets and liabilities must be transferred from the Enterprise to the LLRE in order to carry out those operations.
Timing of resolution plan and interim update submissions – The rule addresses procedural requirements related to the frequency and timing for submission of initial and subsequent resolution plans to FHFA. The rule requires the Enterprises to submit their initial resolution plans two years after the effective date of the final rule and subsequent resolution plans to be submitted every two years thereafter.
Required and prohibited assumptions – The rule provides a set of required and prohibited assumptions the resolution plans should reflect, which include:
The assumption of severely adverse economic conditions;
The prohibition of assuming the provision or continuation of extraordinary support by the United States government; and
The reflection of statutory provisions that obligations and securities of the Enterprise issued pursuant to its charter are not guaranteed by the United States and do not constitute a debt or obligation of the United States.
Content of resolution plans – The rule requires that resolution plans contain a strategic analysis and information sufficient to provide an understanding of an Enterprise's CBLs and facilitating their continuation in a LLRE established by FHFA as receiver. Each Enterprise's strategic plan would also be required to identify and describe potential material weaknesses or impediments to rapid and orderly resolution as conceived in its plan, and any actions or steps taken or proposes to take to address the identified weaknesses or impediments.
Confidentiality – The rule sets out the requirement that the resolution plans include a public section and a confidential section. FHFA expects to work with the Enterprises when developing their initial public sections, to ensure that portions of resolution plans are made available to the public, while balancing the need for candor and to preserve confidentiality of some information.
FHFA review – The rule explains the process for FHFA's review of the resolution plan, including the determination that a plan is incomplete or substantial additional information is necessary, the identification of deficiencies or shortcomings, the provision of feedback, and resubmission to FHFA.
CHANGES TO THE PROPOSED RULE
In response to comments, FHFA made several changes to the proposed rule:
The addition of a 12-month notification requirement if FHFA plans to alter the Enterprise resolution plan submission date;
The reservation of FHFA's authority to refine submission requirements; and
The addition of a "shortcomings" category for supervisory concerns identified in Enterprise resolution plans that do not rise to the level of "deficiencies."
KEY OBJECTIVES AND CONSIDERATIONS
The final rule reflects the following key objectives and considerations:
The purpose of the rule is to require each Enterprise to develop a resolution plan to facilitate its rapid and orderly resolution under FHFA's receivership authority in a manner that (1) minimizes disruption in the national housing finance markets by providing for the continued operation of the CBLs of the Enterprise in receivership by a newly constituted LLRE; (2) preserves the value of the Enterprise's franchise and assets; (3) facilitates the division of assets and liabilities between the LLRE and the receivership estate; (4) ensures that investors in mortgage-backed securities guaranteed by the Enterprises and in Enterprise unsecured debt bear losses in accordance with the priority of payments established in the Safety and Soundness Act, while minimizing unnecessary losses and costs to these investors; and (5) fosters market discipline by making clear that no extraordinary government support will be available to indemnify investors against losses or fund the resolution of an Enterprise.
FHFA believes that the resolution plans should not assume extraordinary government support, whether under the Preferred Stock Purchase Agreements (PSPAs) or otherwise. Expectations of government support increase risk to the Enterprises' safety and soundness and the stability of the national housing finance markets by undermining market discipline and encouraging excessive risk taking. More practically, Treasury's commitment under the PSPAs is finite and cannot be replenished.
Related News Release?
5/3/2021
FHFA Publishes Final Rule on Enterprise Resolution Plans
?Washington, D.C. – The Federal Housing Finance Agency (FHFA) today published a final rule that requires Fannie Mae and Freddie Mac (the Enterprises) to develop credible resolution plans, also known as “living wills." These resolution plans would facilitate a rapid and orderly resolution of the Enterprises should FHFA be appointed their receiver per the Housing and Economic Recovery Act of 2008 (HERA).
“After the capital rule, the finalization of the living will rule is one of the last major regulatory pieces needed to give effect to Congress' intent in HERA. Just like other large financial institutions, these plans will provide Fannie Mae, Freddie Mac and FHFA with a roadmap for preserving business continuity should they fail again," said Director Mark Calabria. “This rule helps create a stronger, more resilient housing finance system by protecting taxpayers and the mortgage market from harm if either Enterprise fails."
The final rule is similar to a rule issued by both the Federal Reserve Board and the Federal Deposit Insurance Corporation under the Dodd–Frank Wall Street Reform and Consumer Protection Act, which requires many large financial institutions to submit living wills. The Department of Treasury's 2019 Housing Reform Plan highlighted the need for a credible resolution framework for the Enterprises, and the Financial Stability Oversight Council endorsed Enterprise living wills in the early fall of 2020.
Under the final rule, the Enterprises must demonstrate how core or important business lines would be maintained to ensure continued support for mortgage finance and stabilize the housing finance system, without extraordinary government support, to prevent an Enterprise from being placed in receivership, indemnify investors against losses, or fund the resolution of an Enterprise.
Link to Fact Sheet
The SCOTUS tomorrow will hear their FINAL oral arguments of the 2020 term and will have more time to focus on deciding cases over the next 60 days.
https://www.scotusblog.com/2021/05/in-final-case-the-court-will-hear-this-term-profound-issues-of-race-incarceration-and-the-war-on-drugs/
https://www.supremecourt.gov/
WE KNOW FROM 5+ YEARS OF PRYING THE DOCUMENTS FROM THE RELUCTANT GOVERNMENTS HANDS VIA DISCOVERY THAT THEIR INTENT WAS TO NEVER LET THE SHAREHOLDERS HAVE THEIR COMPANIES BACK!
I think ALL the legal proceedings can be summed up as simply: "Government Bad, Shareholders Good!"
Let's see if these 9 human beings wearing black robes will write an opinion that provides a meaningful remedy to the Collins Plaintiffs for this governmental overreach that is both abusive and coercive in its effects!
Stay long and strong brother!
“Congress . . . does not . . . hide elephants in mouseholes” David Thompson said this EXACT STATEMENT to the 5th Circuit En Banc 16 Judge Panel! Apparently some of the 16 Judges heard him!
Probably he got the quote from a previous USSCT case...
The FDIC fee the tbtf banks pay to have access to low cost funding is in essence a user fee, kinda like a toll when you use a toll road and I think most akin to the commitment fee. I wonder how many basis points the tbtf banks pay for their governmental guarantee?
Nice find Brooge! Giving a healing hand to millions of American homeowners and renters AND doubling their net worth year over year! "Who can make the sun rise, sprinkle it with dew, ...."
I wonder if HERA calls for the FHFA to be funded by the Federal Government Fiscal Budget POST Conservatorship? If not, THERE'S ANOTHER REASON to BULLDOZE HERA BY SCOTUS! Does the Pharmaceutical Industry fund the FDA? "Program Funding
About 55 percent, or $3.2 billion, of FDA's budget is provided by federal budget authorization. The remaining 45 percent, or $2.7 billion, is paid for by industry user fees. The FDA budget is equivalent to $9.95 per American per year.Nov 18, 2020
https://www.fda.gov › about-fda › f...
Fact Sheet: FDA at a Glance | FDA"the
"The Federal Reserve does not receive funding through the congressional budgetary process. The Fed's income comes primarily from the interest on government securities that it has acquired through open market operations."
https://www.federalreserve.gov/faqs/about_12799.htm#:~:text=The%20Federal%20Reserve%20does%20not,acquired%20through%20open%20market%20operations.
"The FDIC receives no Congressional appropriations - it is funded by premiums that banks and savings associations pay for deposit insurance coverage. The FDIC insures trillions of dollars of deposits in U.S. banks and thrifts - deposits in virtually every bank and savings association in the country.
Deposit Insurance"
https://www.fdic.gov/about/what-we-do/index.html#:~:text=The%20FDIC%20receives%20no%20Congressional,savings%20association%20in%20the%20country.
"The CFPB is funded through the earnings of the Fed, not through appropriations. The CFPB requests monetary transfers from the Fed to the extent needed to fund its operations, subject to a cap based on a statutory formula.Jan 4, 2021
https://fas.org › crs › miscPDF
The Consumer Financial Protection Bureau - Federation Of American Scientists"
"The cases that remain pending after December 31, 2020 are as follows:
District of Columbia. Fannie Mae is a defendant in three cases pending in the U.S. District Court for the District of Columbia—a consolidated putative
class action and two additional cases. In all three cases, Fannie Mae and Freddie Mac stockholders filed amended complaints on November 1, 2017
against us, FHFA as our conservator and Freddie Mac. On September 28, 2018, the court dismissed all of the plaintiffs’ claims in these cases,
except for their claims for breach of an implied covenant of good faith and fair dealing. All three cases are described in “Note 13, Commitments and
Contingencies.”
Southern District of Texas (Collins v. Mnuchin). On October 20, 2016, preferred and common stockholders filed a complaint against FHFA and
Treasury in the U.S. District Court for the Southern District of Texas. On May 22, 2017, the court dismissed the case. On September 6, 2019, the
U.S. Court of Appeals for the Fifth Circuit, sitting en banc, affirmed the district court’s dismissal of claims against Treasury, but reversed the dismissal
of claims against FHFA. The court held that plaintiffs could pursue their claim that FHFA exceeded its statutory powers as conservator when it
implemented the net worth sweep dividend provisions of the senior preferred stock purchase agreements in August 2012. The court also held that
the provision of the Housing and Economic Recovery Act that insulates the FHFA Director from removal without cause violates constitutional
separation of powers principles and, thus, that the FHFA Director may be removed by the president for any reason. The court held that the
appropriate remedy for this violation is to declare the provision severed from the statute. Both the plaintiffs and the government filed petitions with
the Supreme Court seeking review of the Fifth Circuit’s decision. The Supreme Court heard oral argument on December 9, 2020, and we expect a
decision in that case within the next few months.
Western District of Michigan. On June 1, 2017, preferred and common stockholders of Fannie Mae and Freddie Mac filed a complaint for declaratory
and injunctive relief against FHFA and Treasury in the U.S. District Court for the Western District of Michigan. FHFA and Treasury moved to dismiss
the case on September 8, 2017, and plaintiffs filed a motion for summary judgment on October 6, 2017. On September 8, 2020, the court denied
plaintiffs’ motion for summary judgment and granted defendants’ motion to dismiss. The plaintiffs filed a notice of appeal with the U.S. Court for the Sixth Circuit on
October 27, 2020.
District of Minnesota. On June 22, 2017, preferred and common stockholders of Fannie Mae and Freddie Mac filed a complaint for declaratory and
injunctive relief against FHFA and Treasury in the U.S. District Court for the District of Minnesota. The court dismissed the case on July 6, 2018, and
plaintiffs filed a notice of appeal with the U.S. Court of Appeals for the Eighth Circuit on July 10, 2018.
Eastern District of Pennsylvania. On August 16, 2018, common stockholders of Fannie Mae and Freddie Mac filed a complaint for declaratory and
injunctive relief against FHFA and Treasury in the U.S. District Court for the Eastern District of Pennsylvania. FHFA and Treasury moved to dismiss
the case on November 16, 2018, and plaintiffs filed a motion for summary judgment on December 21, 2018.
U.S. Court of Federal Claims. Numerous cases are pending against the United States in the U.S. Court of Federal Claims. Fannie Mae is a nominal
defendant in four of these cases: Fisher v. United States of America, filed on December 2, 2013; Rafter v. United States of America, filed on August
14, 2014; Perry Capital LLC v. United States of America, filed on August 15, 2018; and Fairholme Funds Inc. v. United States, which was originally
filed on July 9, 2013, and amended publicly to include Fannie Mae as a nominal defendant on October 2, 2018. Plaintiffs in these cases allege that
the net worth sweep dividend provisions of the senior preferred stock that were implemented pursuant to the August 2012 amendment constitute a
taking of Fannie Mae’s property without just compensation in violation of the U.S. Constitution. The Fisher plaintiffs are pursuing this claim
derivatively on behalf of Fannie Mae, while the Rafter, Perry Capital and Fairholme Funds plaintiffs are pursuing the claim both derivatively and
directly against the United States. Plaintiffs in Rafter also allege direct and derivative breach of contract claims against the government. The Perry
Capital and Fairholme Funds plaintiffs allege similar breach of contract claims, as well as direct and derivative breach of fiduciary duty claims against
the government. Plaintiffs in Fisher request just compensation to Fannie Mae in an unspecified amount. Plaintiffs in Rafter, Perry Capital and
Fairholme Funds seek just compensation for themselves on their direct claims and payment of damages to Fannie Mae on their derivative claims.
The United States filed a motion to dismiss the Fisher, Rafter and Fairholme Funds cases on August 1, 2018. On December 6, 2019, the court
entered an order in the Fairholme Funds case that granted the government’s motion to dismiss all the direct claims but denied the motion as to all of
the derivative claims brought on behalf of Fannie Mae. On June 18, 2020, the U.S. Court of Appeals for the Federal Circuit agreed to hear the
appeal of the court’s December 6, 2019 order. In the Fisher case, the court denied the government’s motion to dismiss on May 8, 2020 and, on
August 21, 2020, the Federal Circuit denied the Fisher plaintiffs’ request for interlocutory appeal."
Pg 123-124 10q1q21
"Description of Material Weakness
The Public Company Accounting Oversight Board’s Auditing Standard 2201 defines a material weakness as a deficiency, or a combination of
deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s
annual or interim financial statements will not be prevented or detected on a timely basis.
Management has determined that we continued to have the following material weakness as of March 31, 2021 and as of the date of filing this report:
• Disclosure Controls and Procedures. We have been under the conservatorship of FHFA since September 6, 2008. Under the GSE Act,
FHFA is an independent agency that currently functions as both our conservator and our regulator with respect to our safety, soundness and
mission. Because of the nature of the conservatorship under the GSE Act, which places us under the “control” of FHFA (as that term is
defined by securities laws), some of the information that we may need to meet our disclosure obligations may be solely within the
knowledge of FHFA. As our conservator, FHFA has the power to take actions without our knowledge that could be material to our
shareholders and other stakeholders, and could significantly affect our financial performance or our continued existence as an ongoing
business. Although we and FHFA attempted to design and implement disclosure policies and procedures that would account for the conservatorship and accomplish the same objectives as a disclosure controls
and procedures policy of a typical reporting company, there are inherent structural limitations on our ability to design, implement, test or
operate effective disclosure controls and procedures. As both our regulator and our conservator under the GSE Act, FHFA is limited in its
ability to design and implement a complete set of disclosure controls and procedures relating to Fannie Mae, particularly with respect to
current reporting pursuant to Form 8-K. Similarly, as a regulated entity, we are limited in our ability to design, implement, operate and test
the controls and procedures for which FHFA is responsible.
Due to these circumstances, we have not been able to update our disclosure controls and procedures in a manner that adequately ensures the
accumulation and communication to management of information known to FHFA that is needed to meet our disclosure obligations under the federal
securities laws, including disclosures affecting our condensed consolidated financial statements. As a result, we did not maintain effective controls
and procedures designed to ensure complete and accurate disclosure as required by GAAP as of March 31, 2021 or as of the date of filing this
report. Based on discussions with FHFA and the structural nature of this weakness, we do not expect to remediate this material weakness while we
are under conservatorship."
10q1q21 pgs 120-121
"Senior Preferred Stock Purchase Agreements Litigation
A consolidated putative class action (“In re Fannie Mae/Freddie Mac Senior Preferred Stock Purchase Agreement Class Action Litigations”) and two
non-class action lawsuits, Arrowood Indemnity Company v. Fannie Mae and Fairholme Funds v. FHFA, filed by Fannie Mae and Freddie Mac
shareholders against us, FHFA as our conservator, and Freddie Mac are pending in the U.S. District Court for the District of Columbia. The lawsuits
challenge the August 2012 amendment to each company’s senior preferred stock purchase agreement with Treasury.
Plaintiffs filed amended complaints in all three lawsuits on November 1, 2017 alleging that the net worth sweep dividend provisions of the senior
preferred stock that were implemented pursuant to the August 2012 amendments nullified certain of the shareholders’ rights, particularly the right to
receive dividends. Plaintiffs seek unspecified damages, equitable and injunctive relief, and costs and expenses, including attorneys’ fees. Plaintiffs in
the class action seek to represent several classes of preferred and/or common shareholders of Fannie Mae and/or Freddie Mac who held stock as of
the public announcement of the August 2012 amendments. On September 28, 2018, the court dismissed all of the plaintiffs’ claims except for their
claims for breach of an implied covenant of good faith and fair dealing.
Given the stage of these lawsuits, the substantial and novel legal questions that remain, and our substantial defenses, we are currently unable to
estimate the reasonably possible loss or range of loss arising from this litigation."
Page 119 10q1q21
15%+ yoy increase for the FHFA budget, 10q1q21 page 78: "Transactions with FHFA
The GSE Act authorizes FHFA to establish an annual assessment for regulated entities, including Fannie Mae, which is payable on a semi-annual
basis (April and October), for FHFA’s costs and expenses, as well as to maintain FHFA’s working capital. We recognized FHFA assessment fees,
which are recorded in “Administrative expenses” in our condensed consolidated statements of operations and comprehensive income, of $37 million
and $32 million for the three months ended March 31, 2021 and 2020, respectively."
37*4=$144 million annual contribution from Fannie Mae.
WB and Charlie Munger on the froth of the stock market and stock price bubbles, quoting Keynes: "Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done."
From the 1Q21 Financial Supplement:
Q121. Q420. Q120
0.7 % 0.6 % 0.4 % Net Worth Ratio (27)
(27) Calculated based upon net worth divided by total assets outstanding at the end of the period.
Didn't work too well last term for John Paulson did it? Never forget that my friend!
https://www.vanityfair.com/news/2016/11/john-paulson-trump-favor-to-ask
You're going win a lot of friends with that one! I'm sure that the posts will be coming soon! HeeeHeeee!
Do you feel like sharing your reasoning? Let's see, they:
(1). Need to raise Capital IMMEDIATELY, because after stealing their profits since August 17, 2012 into the present and imposing accounting entries that were demanded by the government CONSERVATOR to maximize its free money in 2013 (I think the combined Sweep was $130B in 2013 ALONE-A WORLD RECORD!), the current FHFA DIRECTOR thinks they are undercapitalized.
(2). Although $3B Capital was okay under the former director, it's totally okay for the current Director to demand over 50x that level.
(3). Unlike Venezuela and Agentenia, Wall Street loves it when the federal government nationalizes privately owned corporations.
(4). The gses' FA will simply suggest that the twins offer a hefty dividend yield on billions of newly issued shares, paid for with all the new capital that's going to come in. Just like a typical Ponzi scheme.
(5). But for Hank Paulson, the gses would have gone belly up just like the tbtf banks and therefore common NOT jps should be punished.
Can you imagine any others?
You've got to take your hat off to management, quarter after quarter, year after year, gargantuan numbers and product intermediation and they consistently generate excellent results! Wall Street use to call it Steady Freddie for a reason!
Shame MC is treating upper management like garbage, bashing the corporate culture, why would talented people continue putting up with that?
ALL PART OF MC'S MASTER PLAN TO NEUTER THE TWINS AND LAND A CUSHY 7 FIGURE SALARY AT A TBTF BANK!
That leaves the nasty for us (common) and you (jps) 79.9% Warrants, if the UST sells back to the twins at cost, that would make a possible jps conversion to common offer seem more viable and attractive to jps holders IF their is not a massive common offering. Is that your thinking or do you envision another possibility more likely? Wouldn't this to some extent align the best interests of BOTH JPS AND COMMON?
Before you jump to the "immediacy of capital" argument, which the ceo of Fannie Mae said this morning, BUT that comment COULD HAVE been directed to the usual critics of companies making $5B/qtr, namely Senators Brown and Warren and possibly to SCOTUS to let them know we need capital, consider the possibility that the FHFA believes that some organic growth in the retaining of earnings is consistent with maximizing the attractiveness of a common for jps offer.
From Freddies 1Q21 10q: "had the ERCF been applicable to us as of March 31, 2021,
we would have been required to hold approximately $130 billion in adjusted total capital based on the leverage ratio
requirements specified in the ERCF.
We invest our Net Worth Amount primarily in short-term investments. The table below presents activity related to our net worth
during 1Q 2021 and 1Q 2020.
Table 56 - Net Worth Activity
(In millions) 1Q 2021 1Q 2020
Beginning balance $16,413 $8,882
Comprehensive income (loss) 2,378 622
Capital draw from Treasury — —
Senior preferred stock dividends declared — —
Total equity / net worth $18,791 $9,504
Aggregate draws under Purchase Agreement $71,648 $71,648
Aggregate cash dividends paid to Treasury 119,680 119,680
Liquidation preference of the senior preferred stock 89,061 81,770"
http://www.freddiemac.com/investors/financials/monthly-volume-summaries.html
March 2021 Highlights: ? The total mortgage portfolio increased at an annualized rate of 27.2% in March. ? Single-family refinance-loan purchase and guarantee volume was $103.3 billion in March, representing 76% of
total single-family mortgage portfolio purchases and issuances. ? The aggregate unpaid principal balance (UPB) of our mortgage-related investments portfolio increased by
approximately $9.4 billion in March. ? Freddie Mac mortgage-related securities and other mortgage-related guarantees increased at an annualized rate of 22.7% in March. ? Our single-family delinquency rate decreased from 2.52% February to 2.34% March. Our multifamily delinquency
rate increased from 0.14% in February to 0.17% in March. ? The measure of our exposure to changes in portfolio value (PVS-L) averaged $66 million in March. Duration gap
averaged 0 months. ? Since September 2008, Freddie Mac has been operating in conservatorship, with the Federal Housing Finance
Agency (FHFA) acting as Conservator. ? As of March, our maximum exposure to Fannie Mae-issued collateral that was included in Freddie Mac-issued
resecuritizations was approximately $93.7 billion, and is not in Table 4.
https://themortgagereports.com/76197/biden-first-time-home-buyer-tax-credit-and-grant
I know you're a "in the weeds guy", but let's step back from the trees and take a look at the forest.
The PSPA and the Cap Rule can change, the SCOTUS could eliminate the NWS and the LP in Collins, Yellen can agree to sell back the Warrants at cost if she feels it's in the federal governments best interests to settle. There is STILL A LOT OF MOVING PARTS!
Why don't we wait until the SCOTUS rules in Collins within the next 60 days or so to give us more clarity on the direction of the gses?
If the FHFA can't follow a clear and concise law that says they need to CONSERVE AND PRESERVE assets and instead steals all their profits from August 17, 2012 to today (first in cash then via the Liquidation Preference) why would investors believe ANYTHING THE FHFA PROMISES?
Bye Bye 1031 Exchanges and Stepped Up Basis? "President Biden's new economic plan would eliminate a tax break for many real-estate owners that has enabled them to defer paying capital gains on property sales.
Closing that tax loophole, which has existed since 1921, is part of his $1.9 trillion spending package for new social programs. The current law allows investors to defer paying tax on real-estate gains if they reinvest the proceeds in other properties within six months of the sale.
The deals are known as 1031 exchanges, named for the section in the U.S. tax code. The Biden proposal would abolish 1031 exchanges on real-estate profits of more than $500,000.
In theory, capital-gains tax from these deals eventually gets paid. But on the advice of estate planners, many real-estate investors continue to buy and sell properties this way until they die, passing the capital gains on to their heirs tax-free at death. Mr. Biden seeks to close the death loophole, too, by taxing capital gains on inherited assets.
A congressional tax committee estimated that the 1031 tax break would save property investors more than $41 billion between 2020 and 2024.
In the plan released by the White House on Wednesday, the Biden administration argued the real-estate loophole is one of many on the books that disproportionately allow the very wealthy to avoid taxation. "Without these changes, billions in capital income would continue to escape taxation entirely," the administration said.
Mr. Biden's proposal would also raise the top rate paid on capital gains and dividends to 39.6% from 20%, and it would increase taxes that hedge funds pay on carried interest.
Real-estate investors say the 1031 tax treatment encourages businesses to expand, creating jobs and pumping more money into the economy, especially during times of lower overall economic activity, such as recessions.
Most 1031 deals are done by individuals, rather than by corporations, according to a report from the Congressional Joint Committee on Taxation. They have been popular with wealthy investors who have pooled money to buy small apartment buildings, motels or other types of less expensive commercial real estate.
They are also favored by privately held commercial real-estate firms. Publicly traded real-estate investment trusts, or REITs, have less need for the exchanges because they enjoy other tax benefits.
Dozens of organizations have registered to lobby the federal government against repealing 1031 exchanges, according to Senate lobbying disclosures, including the American Farm Bureau Federation, the National Association of Realtors and the Asian American Hotel Owners Association. A cottage industry of brokers and advisers also exists to facilitate these niche transactions.
The tax treatment also applies to residential sales, enabling home sellers to defer capital gains by reinvesting sales proceeds in a home other than their primary residence. The Biden proposal would continue to allow 1031 exchanges of less than $500,000, meaning many homeowners and smaller investors could still take advantage.
Originally, the exchanges applied to other forms of personal property, such as artwork or machinery. Those property types were eliminated by Congress and President Donald Trump in 2017."
Why do you believe that Billions and Billions of fresh capital will rush in to a 1st Loss Position for a overly regulated company with a public mission with such strong Governmental strings attached and given the absolutely abhorrent treatment of long term common and preferred shareholders?
https://www.cnbc.com/2021/04/29/2-million-homeowners-may-be-eligible-for-new-mortgage-refi-program.html
Ole MC knows who butters his bread!
I think one problem is that there are not enough mills to process the lumber from trees to boards. Another problem is the same one that has prevented new oil and gas refineries from being built, namely volatile commodity prices are difficult to plan for when the capital outlay for plant and equipment is 20+ years. I read an article in the WSJ the other day about how the tree growers aren't really making much more for their trees and that the runup in prices is largely taken by the mills.
"TWIGGS COUNTY, Ga. -- The pandemic delivered an unexpected boon to the lumber industry. Hunkered-down homeowners remodeled en masse and low mortgage rates drove demand for suburban housing. Lumber supplies tightened up and prices smashed records.
"You must be making a lot of money," an Ace Hardware store manager told timber grower Joe Hopkins, whose family business has about 70,000 acres of slash pine near the Okefenokee Swamp.
"I'm not making anything," Mr. Hopkins replied.
Timber growers across the U.S. South, where much of the nation's logs are harvested, have gained nothing from the run-up in prices for finished lumber. It is the region's sawmills, including many that have been bought up by Canadian firms, that are harvesting the profits.
Sawmills are running as close to capacity as pandemic precautions will allow and are unable to keep up with lumber demand. The problem for timber growers is that so many trees have been planted between the Carolinas and Texas that mills are paying the lowest prices in decades for logs.
The log-lumber divergence has been painful for thousands of Southerners who are counting on pine trees for income and as a way to hold on to family land. And it has been incredibly profitable for forest-products companies that have been buying mills in the South. Three Canadian firms -- Canfor Corp., Interfor Corp. and West Fraser Timber Co. -- control about one-third of the South's lumber-making capacity. Since bottoming out last March, shares of the Canadian sawyers have risen more than 300%, compared with a 75% climb of the S&P 500 index.
The surplus of standing pine is such that growers, foresters and mill executives expect that even with mills sawing at capacity and new facilities coming online, it could be another decade, maybe two, before enough trees are felled to balance supply with demand.
Meanwhile, it's a buyer's market for logs down South, said Don Kayne, Canfor's chief executive. "We try to be fair," he said.
At their onset, coronavirus lockdowns seemed to derail the housing recovery. Lumber prices plunged in March 2020. Dealers liquidated inventories. Speculators dumped lumber futures and took short positions, betting prices would fall further. Mills sent workers home and curtailed production. By April, roughly 40% of North America's sawmill capacity was shut down.
Wood was in short supply when the remodeling bonanza began. Then the housing market picked up. Restaurants around the country had to build outdoor decks. Sawmills ramped up to capacity but couldn't catch up. By last summer, lumber was America's hottest commodity.
Lumber futures, a benchmark for an array of regional and species-specific prices, rose to a record in early August and kept climbing. Futures contracts traded up to $1,000 per thousand board feet, more than 50% above the previous high, set during the 2018 building season.
Home builders kept hammering through mild early-winter weather and depleted lumber dealers are stocking up for spring. Lumber futures have hit all-time highs and are more than twice the typical winter price. Spot prices for southern yellow pine set records in January.
None of that has lifted the price of timber, which never recovered from the 2007 housing bust. Logs for softwood lumber averaged $22.50 a ton across the South last summer, the least since 1992, according to TimberMart-South, a pricing service affiliated with the University of Georgia's forestry school.
"If you put inflation on it, it's really sad," said Mr. Hopkins, the Georgia timber grower. Adjusted for inflation, prices for the logs used to make lumber are at their lowest in more than 50 years.
Mr. Hopkins raises timber on a 25-year rotation to support himself and make payments to more than a dozen shareholders in the 109-year-old family business. Because the pines take about a quarter-century to be suitable for lumber, just 4% of the land produces income each year, though taxes are owed on every acre. He said it is like managing a store where he can sell only merchandise from a few shelves.
"We used to be considered wealthy," he said. "I don't see wealth. I see tax bills."
Thousands of Southerners' fortunes depend on timber prices. In Georgia, timberland owned by families and individuals covers roughly one-third of the state.
Georgia, like much of the Southeast, was thick with longleaf pine when British colonists arrived. The crown claimed the big timbers for ship masts. Trees were bled for their gummy sap to make turpentine. After U.S. independence, the Georgia legislature encouraged clearing for farms by offering 500 acres to settlers who built sawmills.
Johnny Bembry's great-great-great-great-great-grandfather got 200 acres near the Ocmulgee River for serving in the Revolutionary War. The family added land over the years and by the 1980s, when the veterinarian took over, there were 1,200 acres.
Cotton and peanuts were too demanding for a practicing vet. Pine trees need little tending. Plus, the federal government was paying landowners to plant trees. Forestation initiatives meant to stop erosion and lift crop prices, such as the Conservation Reserve Program, promised annual payments for every farm acre planted over with trees.
Mr. Bembry was among the droves of Southerners who signed up. He planted mostly slash, a little longleaf, and he added another 800 acres.
The payments and restrictions on logging expired around 2000, just in time for a housing boom that pushed timber prices to highs. Mr. Bembry didn't cut much of his timber, though.
"I liked looking at it," he said. "And it was good for wildlife."
Home prices crashed in 2007. Lumber and timber prices, too. The number of sawmills in the South had already been declining due to consolidation. The collapse in home construction hastened closures of small and less efficient mills. Today the region has about 250, down from more than 400 in 2000, according to TimberMart-South.
West Fraser, the continent's largest lumber producer, and Canfor had already begun buying Southern mills in the years leading up to the crash. Back home in Canada, their prospects were dimming.
Log supply, which is meted out by Canada's provincial governments, is threatened by forest fires and wood-boring beetles, which together have laid waste to tens of millions of acres. The lumber companies also have paid billions of dollars in duties on boards sold across the U.S. border, part of a decadeslong trade dispute between the countries.
"Canadian companies have always been on the losing end," said Eric Miller, president of the Rideau Potomac Strategy Group, a Washington, D.C.-basedconsulting firm. "So the logical solution was for them to jump the tariff wall and invest in the U.S."
Sawing in the South allows Canadian firms to avoid tariffs and be closer to top customers in the Sunbelt's mushrooming housing markets. Labor is cheaper, too.
West Fraser bought mills from Texas to Florida, including 13 from International Paper Co. Canfor started with four in the Carolinas and moved west, adding mills in Georgia, Alabama, Mississippi and Arkansas.
Interfor executives circled Georgia and waited for the bottom. The Vancouver, British Columbia, company pounced at the depths of the housing bust in 2013. Within about two years, Interfor owned one mill each in Arkansas and South Carolina and seven in the pinelands south of Atlanta.
"Whatever Interfor pays, that's what everybody else pays," said Billy Humphries, who advises on timber sales around Macon, Ga., and grows trees himself in Twiggs County. "They moved to the South in pretty tough times. They could be pretty ruthless."
Because of trees bred to become planks and the computerization of mills, well-managed timberland produces about 50% more wood than it did a generation ago, he said.
When Interfor arrived, it studied the surrounding trees, noting ages and diameters, then calibrated mills to accommodate the most common-sized trunks, said Todd Mullis, a former Interfor executive who now works for Mr. Humphries's firm, Forest Resource Consultants Inc.
There aren't enough of the oldest, thickest trees to justify scaling mills for them. Many of the biggest trees went from fetching top dollar to being mashed into paper and cardboard for much less money. This was bad news for growers like Mr. Bembry, whose trees were left growing when the housing crash cut off demand for wood.
"When you design a mill, you design it for the masses," Mr. Mullis said. "The metal matches the wood."
Off the paved roads in Laurens County, Ga., Charles Hill's logging crew is loading trucks bound for Interfor and West Fraser mills. Sorting is done by a $500,000 John Deere swing machine. A computer is in the cab. A merchandiser on its arm senses the length and girth of trunks in its grasp, strips away limbs and slices off the tree top to fit the mill.
Interfor urges loggers to use such equipment. The company says it offers long-term supply deals and premiums for mechanically trimmed trunks to ease the financial burden of buying the machines.
"The most important decision you make is the first decision, which is where to cut the log," said Interfor Chief Executive Ian Fillinger. "The human decision is taken out of it."
At its mills, Interfor installed scanners that size up logs and position and slice them to maximize board feet and minimize waste. Yields climbed as much as 20% within two years, Mr. Mullis said. Current Interfor executives say the company has invested $300 million making the mills more efficient and productive. Two would have closed had Interfor not bought them, Mr. Mullis said.
"The industry in the Southern U.S. has been relatively backward," said Mark Wilde, who researches forest products for BMO Capital Markets. Many lumber mills were built by paper companies eager for the sawdust and scraps to pulp. "Canadians going down South is the best thing that's happened to Southern timber," he said.
This month, Interfor said it would pay a cardboard maker $59 million for a lumber mill near the port in Charleston, S.C., and would spend $25 million to boost output 60%.
The average price of timber sold to lumber mills rose to $24.03 a ton in last year's fourth quarter, according to TimberMart-South. But the increase is little consolation to pine growers. That is the same price as in 2012, when there were half as many homes being built.
Mr. Hopkins worries he might have to sell some of his family's 70,000 acres near the Florida line, likely to hobby farmers -- doctors and dentists from Jacksonville more interested in outdoor recreation than turning profit on timber.
"If I'm not sustainable, I can't keep that land," he said. "Everything is going up except the price of timber."
Mr. Bembry, the veterinarian, is concerned about passing liability to heirs. He is studying the potential to sell his standing trees into the booming market for carbon offsets, which would pay him not to cut, and has been planting longleaf instead of faster-growing slash, aided by federal habitat restoration programs. When the subsidies expire, the foot-long needles can be raked, baled and sold to garden centers and landscapers.
"The salvation for me has been pine straw," he said. An acre can annually produce more than $300 worth.
Lee Rhodes wants to cut and restock for the next generation the 10,000 acres of loblolly pine he manages for his family. It wasn't cut with urgency when prices were high. Now they are so low, and the nearest mill so far, that loggers have turned down jobs on the property northeast of Macon. He wants to hire his son as successor but cannot afford it.
"The first thing I've got to have with 10,000 acres is $55,000" for property taxes, he said. "I do wake up some mornings wondering, why am I doing this?"
No mas for today, but the NAHB wants JB to lower lumber tariffs I think:
https://nahbnow.com/2021/04/skyrocketing-lumber-prices-add-nearly-36000-to-the-price-of-a-new-home/
I think it's important for corporations in the future who are considering taking "bailout" funds, just how far the US GOVERNMENT will go and HOW THEY NATIONALIZE PRIVATELY OWNED CORPORATIONS!
That's right. Given the abusive and coercive use of governmental power by the Executive Branch over the last 12.5 years, it wouldn't surprise me if the SCOTUS utilizes a bulldozer approach in their severability analysis, but a remand for trial would shed a huge amount of daylight on just how abusive the government acted with the twins and while money and instant gratification is important, it is more important for some to know just how far reaching the governmental misconduct went...
De nada! I bet tomorrows 1Q21 earnings shows lower amortization of gfees because of the big jump up in mortgage rates, but higher house prices should positively impact earnings.
Believe me I know and I feel your pain! BUT THIS COULD LIKELY BE THE END OF THE LINE FOR UNCLE SUGGY AND HIS INCESSANT FOOT DRAGGING TO GIVE UP THEIR GOLDEN GOOSE AND FOLLOW THE LAW!
The SCOTUS is not deciding the merits of the Collins case so this type of evidence (a finalized investigative finding that Mel Watt, threatened the Independent Inspector General of the FHFA with cutting their funding) would likely come into play at the trial court level to show just how badly the FHFA went to protect their pilfering of the twins and it may be relevant as to remedies.
Only trial level courts weigh the evidence to come to a decision on the merits of a Plaintiffs Complaint.
Apeallate courts, here the 5th Circuit 3 panel Judge ruling and the subsequent 5th Circuit En Banc 16 Judge ruling, DECIDE MATTERS OF LAW NOT FACTS!
The SCOTUS and all the Apeallate Courts in the 5th Circuit are simply answering the questions of LAW presented to it on appeal, i.e., (1) Is the single member head of the FHFA Unconstutional and if so, would that invalidate the nws, HERA in its entirety (a bulldozer) or just strike the Constitutionally offensive provision and REWRITE HERA ADDING A AT WILL FIRING BY THE POTUS INTO HERA (a scalpel approach to severability analysis that will likely prevail). (2) Under the Administrative Procedures Act should an ultra vires act (like the nws) be invalid? Also, the SCOTUS is likely to put to rest the questions of whether the anti-injunction provision and the shareholders direct versus derivative positions prevent the Collins Plaintiffs from a meaningful remedy.
The SCOTUS in analyzing the Constitutional Claim presented by the Collins Plaintiffs could take a hard look at Humphreys Executor (a case decided post FDR'S New Deal, when FDR threatened to PACK THE COURT-sound familiar?) AND POSSIBLY OVERRULE HUMPHREYS EXECUTOR as Justices Thomas and Gorsuch mentioned in their Seila Law opinion. Which may or may not have been the reason they granted a Writ of Certiorari in both Seila Law and Collins in October 2019.
As you can see, some heady legal stuff that could last for generations to come, add to that the Severability Analysis of both Collins AND California v Texas (the ACA Case-where Texas wants to use a bulldozer on OBama Care/ACA) and how they need to be distinguished or alike in their rulings, and May or June seems likely for a ruling.
"For now, the Fed noted the health of the mortgage and housing industry, with Powell citing it as the “strongest housing market that we have seen since the global financial crisis.”
“I would say that before the pandemic, it was a very different housing market than it was before 2008,” Powell said. “So we don’t have that risk of a housing bubble where people are overleveraged and owning a lot of houses.”
Powell did acknowledge that the Fed has been monitoring the rising home prices borrowers are experiencing as limited inventory puts upward pressure on affordability and demand. The National Association of Homebuilders reported on Wednesday that due to lumber prices tripling in the last 12 months, the average price of a single-family home increased by nearly $36,000 — an impressive spike that has taken a toll on first-time homebuyers, Powell noted.
“It’s part of a strong economy that there are people that have money to spend and want to invest in housing, but my hope would be, over time, housing builders can react to this demand and come up with more supply,” Powell said."
https://www.housingwire.com/articles/the-fed-isnt-going-to-stop-buying-mbs-just-yet/
https://www.housingwire.com/articles/skyrocketing-lumber-prices-add-36k-to-new-homes/
Wow! The hits keep coming from the abusive and coercive acts of the government, in the OVER 12.5 YEARS OF NATIONALIZING THE TWINS:
"Specifically, the report found that Wertheimer and a senior employee imposed on auditors within her office “an unachievable performance standard” that was “designed, sequenced and intended to coerce targeted auditors to accept” buyouts.
The report also found that Wertheimer “failed to resist or report to Congress threats by the FHFA director to cut the OIG’s budget and reduce the OIG’s staff and resources,” referring to Watt.
When the council of inspectors general and Senate Republicans tried to investigate the allegations, Wertheimer obstructed those efforts and intimidated employees who cooperated or might have thought about cooperating."
PAY NO ATTENTION TO THE PERSON IN POWER BEHIND THE CURTAIN! EVERYTHING IS LEGITIMATE!
SCOTUS, SCOTUS, SCOTUS!
MCLEAN, Va. – April 28, 2021 – Freddie Mac (OTCQB: FMCC) today issued the following statement in support of the announcement by the Federal Housing Finance Agency (FHFA) that Freddie Mac and Fannie Mae will introduce a new option aimed at helping homeowners who make at or below 80% of the area median income refinance their mortgage. Freddie Mac’s Refi Possible will be available this summer for borrowers with Freddie Mac-backed mortgages.
Donna Corley, Executive Vice President and Head of Single-Family Business at Freddie Mac released the following statement:
“Millions of homeowners have benefited from refinancing to reduce their monthly mortgage payment and build long-term wealth. Freddie Mac’s new Refi Possible mortgage creates more equitable opportunities by making it easier for homeowners in lower income brackets to refinance their mortgage. Refi Possible reaches many homeowners who can benefit from refinancing and provides flexibilities that incentivize our clients to serve these eligible borrowers moving forward. Our goal is to expand access to credit responsibly and make sure we are supporting sustainable homeownership.”
Freddie Mac makes home possible for millions of families and individuals by providing mortgage capital to lenders. Since our creation by Congress in 1970, we’ve made housing more accessible and affordable for homebuyers and renters in communities nationwide. We are building a better housing finance system for homebuyers, renters, lenders, investors and taxpayers. Learn more at FreddieMac.com, Twitter @FreddieMac and Freddie Mac’s blog FreddieMac.com/blog. Freddie Mac has a longstanding commitment to providing consumer education to help borrowers understand every stage of their home journey. Homeowners can review resources around refinancing at My Home by Freddie Mac®.
DOES SHERROD BROWN WANT TO INCREASE ACCESS TO AFFORDABLE HOUSING?
“Adrianne Todman’s entire career has been about creating and preserving affordable housing. As Deputy Secretary of HUD, she will work to help build back better by addressing the coronavirus pandemic and expanding equitable access to affordable housing in all communities,” said Brown. “During my meeting with her, we discussed HUD’s plan to reverse the harmful policies of the Trump Administration, invest in affordable and public housing, and expand access to homeownership. I am confident in Ms. Todman’s leadership and vision for HUD and will urge my colleagues to support her nomination.”
https://www.brown.senate.gov/newsroom/press/release/brown-meeting-adrianne-todman-nominee-deputy-secretary-hud
Jerome Powell: "We think mortgage loans are safe and increased prices will prompt builders to add more supply"
We're not the ONLY citizens affected by Governmental Overreach of Power! Today the SCOTUS heard a case about the intersection of 1st Amendment Free Speech and a girl in High School who at the time tweeted curse words in reference to her opinions about what she thought of the high school cheerleading squad, coach, and school after she didn't make the cheer team and was banned from the cheer squad for 1 year.
https://www.c-span.org/video/?510036-1/mahanoy-area-schools-district-v-bl-oral-argument
They are kinda busy, BUT I think next Monday is their last day to hear oral arguments in the October 2020-2021 term and THAT'S WHY SO MANY DECISIONS COME OUT IN MAY AND JUNE, ESPECIALLY IF THEY DECIDE TO OVERRULE HUMPHREYS EXECUTOR.
Who doesn't want to get their work finished before taking their Summer Vacation?