Fannie Mae Preferred S (FNMAS)

[Letgoofmyfannie]

Obama Budget May Tackle Housing Reform

On Weds. we'll see if there are any clues...


http://www.thestreet.com/story/11890331/1/obama-budget-may-tackle-housing-reform.html


"" Will Fannie, Freddie Repay Treasury?

Finally, there is the gargantuan problem of what to do with housing finance giants Fannie Mae (FNMA) and Freddie Mac (FMCC) that are still in conservatorship. Granted, the budget is not going to tackle this controversial question, but the fact that the agencies have returned to profit and may be in a position to repay the government has obvious implications for the taxpayer.

Currently all of Fannie Mae and Freddie Mac's profits go to the Treasury, but they count as dividends rather than a repayment of bailout money. Until the government decides what to do with Fannie and Freddie, the Treasury can milk the billions in dollars it gets from the agencies.

Some investors are betting that the housing giants will soon repay the government and have money left for shareholders.

That idea disregards political reality, according to some analysts, since neither party has any desire to return the agencies back to their private form.

The budget proposal may contain some language that allows for private capital to return to the mortgage market, such as further increases in the agencies' guarantee fees and charting a path towards sharing credit risk. ""