Freddie Mac-No Politics (FMCC)

[hillaryha64]

READ ! F & F WILL SURVIVE


Hi both longs and shorts, I am back. Long time no talk.

Although people, especially media, consider yesterday was the doomsday for F & F, but in my opinion

1/ Government MAY create a New Entity by combining Fannie & Freddie -----> Based on Proposal of Current FHFA Director, DeMarco. That is called REFORM, means fixing the current system, not shutting down F & F.

In such a case, current FNMA & FMCC Junior Preferred & Commons will be converted to New Entity's symbol equally 1 : 1, I believe.

2/ At the New Entity, Government MAY no longer guarantee for mortgages of Multi-Families Properties which are currently dominated by Freddie Mac. Those properties are rental, producing income for investors, and the mortgage guarantee from Government does not make sense.

This sector is completely capitalized by private market. ---> Based on Proposal of Current FHFA Director, DeMarco.

3/ Government MAY put some first loss to investors, let's say between 5% - 10% ---> Based on Corker's Bill

Lenders have to pay fees to get such guarantees from Government
they actually shift those fees to Borrowers ) ---> Based on Corker's Bill

4/ Government MAY continue to guarantee for residential mortgages of fixed programs such as 15, 20, 30 years and some amortized adjustable programs, not interest only ones. Plus, Government MAY continue to guarantee Conforming Loans up to 625K which is as current. Jumbo Loans above 625K have no guarantee
---> President's own plan.

5/ Government MAY put more restrictions on underwriting guidelines, let's say 5% - 10% down payment is required for purchases to lessen the risk . Plus, Borrowers have to be eligible to make mortgage payments at the time of loan applications . ---> President's own plan.

My opinion only. Any thoughts ?