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Collins has been in their inbox for over a year now, they did the heavy lifting in Seila Law last June 2020, and they were given notice from the government when the Cert was filed in 2019 that this case has implications for US Housing Policy. So, miracle, no, surprising yes!
But SM should know that it doesn't take a mental giant to see that the nws, is an ultra vires act of a conservator, that the 5th Circuit EnBanc court ruled so, and that it is IMPOSSIBLE TO get them out of government control without addressing the nws!
These are blue chip corporations worthy of a relisting on the NYSE, HOWEVER THEY AIN'T GOING NOWHERE UNTIL THE NET WORTH SWIPE ENDS!
I remember when they were delisted from the NYSE, most if not almost all Pension Funds and other well heeled Institutional Investors with Fiducicary Duties then as well as now, are unable to buy stocks on the Pink Sheets!
That was my lowest entry point 26 cents per share! Good times, good times!
Things are a lot different than 2011 (I never saw the Net Worth Swipe coming!), these are more interesting times, lets see what happens!
Thanks for sharing and while we lost many investors over the years, I hope you will continue contributing to the board!
Great, because I always like to buy me some cheap Financial Juggernauts! Tell me Potty, how low will it go, I loaded up the other day but are you saying I should wait to buy more?
My lowest entry price was in 2011 at 26 cents per share, will it get that low and how come you don't sell given your lack of optimism?
Do you believe that the nws will last forever?
Well, I think historically the gses have always funded investor properties (helps provide affordable housing) and second homes. I think during Covid-19, according to the NAHB Economist in an article I posted here on Friday or Saturday, he said people are moving and buying second homes and the growth is through the roof compared to historical norms.
MC, realizing that the gses have razor thin capital has decided to pull back on these more risky loans (when times get tough you are going to pay your primary residence loan but not necessarily your second home).
I believe the 5th Circuit EnBanc ruling stated that the nws WAS AN ULTRA VIRUS ACT BY THE FHFA, and was ruled in response to a Summary Judgment, so had the USSCT NOT accepted the Writ of Certerrori, then the 5th Circuit would be going to trial on the damages right now.
But I think most of the litigation in most of the courts are on hold while the biggest dogs in the court system, the SCOTUS, make their ruling(s).
The SCOTUS is aware of all the litigation pending on the nws and the Constitutionality of the Single Member director fireable only for cause.
Collins has been in the SCOTUS INBOX FOR OVER 13 MONTHS, they know the importance of the case and its implications on US Housing Policy.
Who knows, they are releasing opinions this Thursday, maybe (seriously doubt it - more likely by July 1st) Collins will come out and SM will finally make a move.
You know the gses could consider some of these more risky mortgages and help quell the tight supply of housing IF THEY HAD MORE CAPITAL, yet the NAR, NAHB, AND THE MBA HAVE CONSISTENTLY OVER THE LAST 12 YEARS FOUGHT TOOTH AND NAIL AGAINST RELEASING THE GSES FROM CONSERVATORSHIP, WHY?
Thanks, but I hire a company that does all my social media stuff, but by all means, I would be flattered if you or someone else wants to copy and paste it and send it to him!
Iam sure at this point he already has figured out what he is going to do!
It all comes down to whether or not SM REALLY WANTS to protect taxpayers by allowing Private Capital to accumulate in a 1st Loss Position, we will know for sure in 10 days or less!
To allow the UST to continue sweeping their retained earnings into the Treasury's coffers continues a path of increasing the taxpayers risk AND is the antithesis of conserving and preserving their assets.
Believe me, I'm not overly optimistic BUT we are talking about drafting 2 or 3 pages to do a 4th Amendment, SM and MC have already given Congress plenty of notice, FSOC and Jerome have an idea, and increasing capital protects the taxpayer.
There's only 3 ways to exit Conservatorship, the Courts, Congress, or Administratively.
How's it going to get done then? The gses exit from conservatorship?
SM and MC have already given 2 years notice to Congress as to what they could do, FSOC and Jerome probably know what they have in mind.
It only took 2 pages of paperwork to amend the pspa in 2019...
It would be super easy for SM to raise the caps but why not do some substantive changes to the PSPA to allow the gses a path forward or blueprint to exit conservatorship?
After all, a bailout is not meant to be perpetual, much less forced by the government.
Yes, Mitch said that the Senate will only reconvene prior to January 20th, with the unanimous consent of every Senator.
"The Senate is currently in recess and only holding pro forma sessions every three days, with one scheduled for Jan. 12 and another for Jan. 15.
McConnell, R-Ky., said it would take unanimous consent from all 100 senators to conduct any kind of business, including impeachment, during the pro forma sessions. Obtaining unanimous consent is unlikely given Republican control of the Senate."
https://www.cnbc.com/2021/01/09/capitol-riots-trump-and-biden-transition-news-live-updates.html
That's right RPS, and contracts can be written with Condition Subsequent Clauses that can account for unknown future events. The important part is that both MC and SM can "get them out of conservatorship", by signing a 4th Amendment that is a roadmap or blueprint for the future.
We will know soon enough, plus I think the SCOTUS opinion is likely to be net positive for shareholders.
That was kinda weird that he complained that it wasn't enough, did he say from the beginning he wanted $2k? I think the $2k versus $600 was in retrospect, what squeaked out the slimmest of wins in GA! How many voters said, "Hell ya, I want an extra 1400 bucks for free from my Uncle Sugar!", which lever do I push down?
What do you see as the best, worst, and most likely scenario for the gses, as the D's take over the US Congress (barely) and with JB as our Commander in Chief?
Will JB let MC finish the job that he just started? (Not likely in my view!)
Will JB install Jim Parrot or one of his fellow travelers or the Zand as his new FHFA DIRECTOR?
Will Sherrod Brown head the SBC and introduce Legislation to keep the twins imprisoned forever?
Inquiring Minds Want to know!
Seems at a minimum SM would raise the caps (4Q20 earnings could be the best ever). It's not like he hasn't discussed doing this over the last 4 years. I'm sure MC told SM what the ballpark is for 4Q20 earnings and not to leave him twisting in the wind.
While I think there is little to no chance the Collins case opinion comes out next Thursday at 10am, I don't see SM walking away from this without at least raising the cap and possibly accelerating what he thought that he originally would have 4 years to do.
Hmmm, should I buy a pizza slice at Costco or a share in these financial juggernauts?
Interesting times, indeed!
It looks like approximately 1/4 million shares were sold in the last several minutes of trading, bold move, day traders, or just plain loco?
Wishful thinking I know, but...
"The Court may announce opinions on Thursday, January 14. The Court will not take the Bench. Opinions will be posted on the homepage beginning at 10 a.m."
https://www.supremecourt.gov/
No more posts for me today, you know da rules, 15/day or else you pay!
"Fannie Mae's Multifamily business saw a record year of MBS issuance in 2020. In addition, Fannie Mae's re-securitization platform issued over $28 billion in ACES® and GeMS REMICs – another record level. Despite high volumes and first quarter dislocation, spreads have remained strong and the Agency CMBS investor base continues to grow. We look forward to another strong year in 2021."
https://www.fanniemae.com/newsroom/fannie-mae-news/fannie-mae-prices-759-million-multifamily-dus-remic-fna-2021-m1-under-its-gems-program
4Q20 earnings should be juicy!
"These recent slowdowns illustrate the challenges for the housing industry in 2021. Home price growth has been strong — up 8.4% year over year in October. This exceptional gain is due to strong demand, but also a function of limited inventory. Such prices gains and construction cost increases (lumber prices are on the rise again, up 60% since mid-November, adding thousands of dollars to the cost of a new home) threaten to price out hundreds of thousands of buyers in the months ahead.
While strong demand suggests continued gains for home construction in 2021, affordability declines and supply-side limitations will generate lower housing growth rates than those recorded last year."
https://nahbnow.com/2021/01/2-critical-threats-to-housing-affordability-in-2021/
"Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements
of Certain Officers.
Freddie Mac (formally known as the Federal Home Loan Mortgage Corporation) has entered into a new compensation arrangement with Donald F.
Kish, Senior Vice President, Corporate Controller and Principal Accounting Officer, in recognition of his increased responsibilities in support of our
Chief Financial Officer, Christian M. Lown, from June 15, 2020 to December 31, 2020. This arrangement was approved by the Federal Housing
Finance Agency (FHFA), as Conservator, on January 6, 2021. Pursuant to this arrangement, Mr. Kish has accrued a special cash award of
$196,000, which will be paid in two equal installments: the first as soon as administratively possible and the second approximately 60 days later. To
be eligible to receive the award, Mr. Kish must remain an employee at the time each installment is payable, except in certain termination events
including death, disability, and involuntary non-performance-based termination by Freddie Mac.
Other than as described above, the award does not affect Mr. Kish’s compensation arrangement as described in Freddie Mac’s Annual Report on
Form 10-K filed on February 13, 2020 and Current Report on Form 8-K filed on February 21, 2020."
Well I think the tbtf banks, the MBA, and other Financial Intermediaries (as well as DJT, SM, and MC) that want a "piece of the action" have lobbied the US Congress hard for 12+ years to get their coveted Explicit Government Guarantee Charter from Uncle Sug!
To date they have failed miserably! Why would the federal government want to put $6.7T PLUS ON THEIR BALANCE SHEET, when they can let the gses retain Capital and have private capital in a first loss position? There would be the inevitable race to the bottom in both loan quality and quantity with the taxpayers on the hook and worse it would be setting up the conditions for another housing crash like 08/09.
The Housing Plan said that the Administration would prefer the Legislature to follow their recommendations for housing finance reform, BUT ABSENT A LEGISLATIVE FIX, THEY WOULD FOLLOW THE LAW TO ADMINISTRAVELY GET THEM OUT OF GOVERNMENTAL CONTROL. Repeatedly they answered Congressional Inquiries IN WRITING AS TO WHAT THEY WOULD DO.
MC said, "In 2008, da GUBMINT should have put them in receivership".
Do you think that MC wants to ignore HERA and instead of preserving and conserving their assets, put them in receivership, today?
If you do, I think you can walk that plank alone!
Seems that as we get closer to January 20th, with no word from UST, that could be right. But, don't you think that at this point, the gses' management has informed MC about the stellar 4Q20 imminent earnings and that MC has at least notified SM that he should raise the earnings cap prior to leaving and btw Stevie, it would be easier to do the Housing Plan if you do x, y, and z to the PSPA?
Or would that be impossible?
Nice! The risk to reward ratio is appealing! What do they say, "Let's see what happens!"
If you do stick around, you might be surprised that the wheels of Justice, while slow turning, more often than not, reach the right decision based on the merits of the case. We will know probably by July 1st, unlike the other cases pending throughout the court systems, Collins cannot be appealed further on the issues presented to the court.
Would this be where Stevie announces any amendments to the PSPA?
Not sure about when CRP will be discussed publicly, maybe MC will give us some clues on January 22nd. I think they hired the Financial Advisors over 1 year ago didn't they?
I think people are selling because:
(1). They don't think Stevie is going to do chit with the PSPA in the next couple days (although historically they have announced big changes on Fridays after the close).
(2). Now we know that the Congress is, by the very slimmest of margins, one party controlled and any MC replacement will easily get through the SBC.
(3). There could be some McNasty Legislation for shareholders headed our way if Congress decides to stick it to the shareholders yet again.
(4). Like you, little to zero faith in the rule of law and the courts.
(5). A beginning of the year reassement as to whether or not they want to deal with the drama and all the moving parts.
(6). FOMO with other "sure thing" investments like Tesla.
WHY DON'T YOU SELL YOUR POSITIONS NOW AND REALLOCATE BECAUSE YOU NEVER SEEM VERY OPTIMISTIC in regards to the gses future?
Apparently no one in Clowngress, the UST, or POTUS or stink stack or so many other posters gives a chit about the twins, so maybe by default we are the only ones left!
Go ahead and get in line and try to sink these ships, I don't think you or anyone else will do it and am betting accordingly!
I know, David Stevens thinks Sherrod will head the Senate Banking Committee, he is as anti-business, do ANYTHING AND EVERYTHING to help the struggling poor and middle class as they come! Like almost all the Socialists, they mean well but don't have a solid grasp of the concept that hard work and capital investment involves people taking risks and they aren't going to take those risks if his party steals their rewards.
We will see, it is beyond obvious that the gses desperately need capital because Uncle Sug has had his hand in the till stealing all their profits for the last 8+ years!
Not sure about NET INCOME BUT, take Freddie Mac for instance, through November 2020, YTD, they have issued $1.060494T in new MBS, AFTER $678.105B IN MORTGAGE MBS LIQUIDATIONS (i.e., mostly refis of existing MBS), THEY HAVE NETTED $358.930B IN NEW MBS ADDED TO THEIR BOOK OF BIZ.
AT 42 BASIS POINTS, THAT EQUALS APPROXIMATELY $1.5B IN ADDITIONAL NET REVENUE FOR MANAGEMENT TO WORK WITH.
That's not so bad is it?
Nice! Think about it, so many powerful people and constituencies (e.g., MBA, FM WATCH, the TBTF BANKS) have tried in vain to drive a stake through the hearts of the gses, but they keep going and going and going...
I think it is a testament to the Wisdom of their creators (ironically da gubmint) who realized that free running capitalism in the mortgage market is not always ideal, that a federal implicit or explicit guarantee IS needed to avoid market panics that can be ruinous to our free economy and the financial health of its citizens, that the current system provides low cost funding for Americans for a product that is not available almost anywhere else in the world, and for some reason(s) this is the best system AND doesn't cost Uncle Sug a dime!
I think SM and DJT are making a big mistake if they don't amend the pspa before they leave, but the SCOTUS, and/or time will eventually solve the problem as the gses continue to prove their societal benefits!
Dropping 80 cents in share price within less than 30 days is disheartening, especially as many were expecting to be popping the champagne cork already!
I think many people have come to the conclusion that with the D's controlling the 2nd Branch of government by the absolute slimmest of margin, that it's doomsday for the gses, but I doubt that politicians will really want to add $6.7T MORE onto the federal balance sheet, when they can keep the implicit guarantee in place, let private capital accumulate into the 1st loss position, and reap the reward of this almost uniquely American Secondary Mortgage Market by providing the 15 and 30 yr PREPAYABLE AT ANY TIME FIXED RATE MORTGAGE in copious and relatively low cost amounts.
Can't wait to get the shot! Like Barrio says, "It's coming Amigos!"
No question that the gses and Cov are waiting games! I truly believe that the rule of law, our position within the Secondary Mortgage Market, and the importance of the gses are on our side!
Just like with the vaccine, ALL we have to do is wait!
Thanks for helping others battle this most vicious deadly virus, your work is of a very high calling and we are all grateful to you!
OMG, When I worked at Fannie Mae from 1988 to 1993, EVERY YEAR ALL roughly 2,500 employees received a stock option on 300 shares at a strike price of 85% of the closing price at the end of February. It was exercised in January of the next year. Tim Howard and Tom Lawler were JUST STARTING the mortgage portfolio. They had Bloomberg terminals peppered throughout the hq buildings. The eps was going way up and the employees were estactic, saying things like, "I am going to get the leather seats on my new car!". It was a lot of fun, but we worked our asses off!
Given the twins business model of basically insuring low risk mortgages, coupled with the approximately 126 basis point net interest margin from a growing portfolio, the stock price did very very well back then!
Today, given the portfolio cap of $250B, plus the limited ability to grow earnings from MBS growth, their earnings won't skyrocket like that again.
I am fairly bullish on the SCOTUS, BUT remember what Judge Margaret Sweeney told David Thompson so many years ago, "Never a good idea to bet on the outcome of a court case". It doesn't take a mental giant to see what has happened to the gses by the governments bad acts. That's why it's disturbing that SM can't figure out how to "get them out of government control." But go ahead Steve, give Maxine, AOC, Chuckie, and Sherrod $20B to $30B PER YEAR for an agenda that you may likely disagree with!
The other thing I like is that litigation is rarely quickly resolved and there is a possibility of years of retained earnings going forward to build up capital. Of course I think everyone knows that the SCOTUS will really be the only finality as far as litigation is concerned.
Another thing I like is that this is a friends with benefits situation where da GUBMINT keeps $6.7T off their balance sheet and the gses have the charters. In essence a Mutually beneficial relationship that was originally chartered by da GUBMINT.
One more thing, you are right, I don't see the twins going away either, they are the plumbing system of the Secondary Mortgage Market!
I kinda hope the price keeps going down, so I can buy some more, how low do you think it will go? On July 8th, 2010, I bought Fannie at 26 cents/share! But unfortunately my average cost/share is higher.
Haha, its good to have some humor in life and we shouldn't really let these downturns in the stock price get the best of us!
I think I was reading TH the other day, and he seemed to be of the opinion that the sky is not falling as it relates to the incoming JB administration. Remember, JB has been in the rodeo a LONG TIME, due to his age is relatively more conservative than the far left liberals in the party, and even Jim Parrot may realize the benefit to the government, the Secondary Mortgage Market, and homeowners of the benefits of putting the gses back to where they were prior to the 12+ year "conservatorship".
While I think it is very unlikely that JB keeps MC, you never know, as JB has said he wants to create "Unity" and maybe keeping MC in place might help all the players involved with the Secondary Mortgage Market. But with a D controlled Congress he will have zero resistance to getting whomever he wants as the head of FHFA.
The window for SM to act is closing rapidly and it looks like he doesn't really give a chit!
The gses can maintain their existing structure (a Private Enterprise with a Public Mission) and become a "Public Utility" just like your local utility, that is through enhanced regulations by a regulator! Most utility companies (I have ownership stakes in many) typically are told by their regulators how much they can charge, what ROI they can get, and whom they must serve.
There would be no reason to really change a thing.
BA has said this would likely be one possible result of all this. But first, the government will have to "get them out of government control".
It looks like many people are bailing on this stock and have had it with what appears to them to be a never ending saga of the government with its boot on the neck of the shareholders.
I'm going to stick around and see what happens!
https://www.cnbc.com/2021/01/07/buyers-and-sellers-increasingly-pessimistic-about-the-housing-market.html
You only take a loss when you sell for less than you paid! Of all my investments, I enjoy this one the most as it has so many moving parts and intersects, Legal, Financial, Real Estate, and Governmental Power, all subjects that I find VERY INTERESTING!
I rarely sell my investments, think trying to time stock price movements is fraught with peril, and have enjoyed watching da GUBMINT try to unsuccessfully slay these highly profitable beasts that they created.
What is your worst case scenario and WHY?
Almost below 2 bucks! Hmmmm, buy more for a possible PSPA amendment by SM or bet on SCOTUS or do nothing?
There will clearly be a tremendous pop if SM amends the PSPA, but with this investment (like all my others) I approach it with the Patience of Jobe, I buy companies, etfs, and real estate with the idea (like WB) that I will never have to sell, and will likely pass (MINUS THE 50%+ DEATH TAX!) these assets down to future generations!
So I will be here for awhile, unless I die from Cov or SM THROWS ME UNDER THE BUS, LIKE HE DID MC!
DO YOU WANT ME TO TELL YOU HOW LONG I HAVE HELD STOCK IN THIS COMPANY?
ANSWER: SINCE I WORKED AT FANNIE MAE FROM 1988 TO 1993
Has anyone held this long?
Everything has an opportunity cost, there is only two things you can do with money, save it or spend it. How do you know what you would have invested in anyway?
All my other investments are going pretty well but this one has been the problem children for the last 12 years.
What Uncle Sugar did here is totally wrong, is the EXACT OPPOSITE OF WHAT A CONSERVATOR SHOULD DO, and will likely be rectified at some point as having private capital in a 1st Loss position is a win win situation for the government and eventually the shareholders.
But you can always sell everything in the next 5 minutes and buy some Tesla, Elon just surpassed Jefferey to become the richest Dude in the world!