Fannie Mae-No Politics (FNMA)

[Wise Man]

It's funny that neither the low profile WSJ Editorial, always with the "taxpayer's risk" when it's null in FnF, as it only buys obligations SPS from companies that buy mortgages with maximum 80% LTV at origination, which took 5 and 6 years for FnF to pay them down (exception to the Restriction on Capital Distributions), respectively, and as a result of fabricated losses, nor Meredith Whitney, mention that the proposal by Freddie Mac is a Personal loan at a whopping 9.5% rate, and with the collateral valued at all time high.
Double risk increase.
Likely, this was the reason why the CEO of Freddie Mac, with 30+ years of experience in mortgage finance, resigned effective March 15th, before it was unveiled.
This product has nothing to do with a mortgage, like a cash-out refinancing as a result of refinancing the entire UPB of the mortgage when interest rates are low.

On the other hand, the shareholders proposed many years ago, that FnF could repurchase the second-lien mortgages that were a business stolen by the banks, as they used the collateral owned by FnF.
This collateral-sharing was the reason of the robo-signing case in 2009-2010, where the banks (mortgage servicers) wanted to foreclosure on fast, in order to protect their second-lien mortgages, disregarding that a first mortgage gets paid first.
It's estimated that currently, there are $2+ Trillion second-lien mortgages outstanding at low rates, with the collateral owned by FnF.
This could free up the battered balance sheets of the banks, that could start lending again or boost their sound condition, currently with hidden unrealized losses (unaccounted for in Equity, either with change in AOCI or fair value change reflected later in the Retained Earnings account).