Tuesday, August 13, 2013 11:11:31 AM
<<<*MARKETWIDE SYNOPSIS - FNMA, FMCC*>>>
ABSURDLY, OUR PRESIDENT WANTS TO DO AWAY WITH FANNIE AND FREDDIE...and the media is having a field day. Is all publicity good publicity, as they say? Too early to know, but so far, no good. Despite earnings, both are still trending-down, callous to everything but negative news. Ironclad resistance levels halt any positive price action. Market wide, confidence appears nonexistent as political power players plot the methodical dismemberment of the GSEs. Analysts warn of the high probability that common shares will soon be worthless. If there was ever a time to consider these stocks a viable investment, that time has now passed. Is the party over? _______________________________________________________________
NEWS CLIP: IS FMCC A BUY?
http://www.bizjournals.com/newyork/news/2013/08/09/cory-bookers-startup-waywire-critics.html#ooid=dkd250ZDr9Ml4zUOijMjvcTkKWo-T0op
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President Calls for Ending Freddie and Fannie, Hints at HARP Expansion
President Barack Obama, speaking to an audience in Phoenix yesterday, tied his proposal reforming the U.S. housing system to both his on-going theme of shoring up the middle class and to immigration reform. Among his specific proposals were the gradual elimination of Fannie Mae and Freddie Mac and the need to insure the availability of decent and affordable rental housing.
Calling owning a home "the ultimate evidence that here in America, hard work pays off, that responsibility is rewarded," he pointed to the difference between when his grandfather was able to buy his first home with an FHA loan and the events leading up to the recent crisis. "In that earlier generation, houses weren't for flipping around, they weren't for speculation -- houses were to live in, and to build a life with." But unfortunately, he said, responsibility gave way to recklessness - and triggered a recession.
The President enumerated some of the steps that the government has already taken to reverse the decline in housing and some of the recent signs of recovery, emphasizing that housing isn't just important for the person who owns the house - it impacts the entire economy "Construction workers, contractors, suppliers, carpet makers, all these folks are impacted by the housing industry."
We've made progress, he said, but we've got to build on this progress and "turn the page on this kind of bubble-and-bust mentality that helped to create this mess in the first place. We've got to build a housing system that is durable and fair and rewards responsibility for generations to come".
There are, he said, five immediate steps that must be taken:
•Congress should pass a bill giving every homeowner the chance to save thousands of dollars a year by refinancing their mortgage at today's rates.
•We've made it harder for reckless buyers to buy homes that they can't afford now we must make it easier for qualified buyers to buy ones they can afford by simplifying overlapping regulations, cutting red tape, and giving persons who have worked hard to repair their credit a second chance.
•We must fix our broken immigration system because when more people can buy homes and play by the rules, home values go up for everybody. One recent study showed the average homeowner has already seen the value of their home boosted by thousands of dollars because of immigration.
•Rebuild the communities hardest hit by the housing crash; putting construction workers back to work repairing rundown homes, tearing down vacant properties so that the value of homes in those surrounding areas start picking up.
•Make sure families that can't or don't want to buy a home still have a decent place to rent. Instead of making everyone feel like they must own a home, even if they weren't ready let's invest in affordable rental housing. Let's bring together cities and states to address local barriers that drive up rents for working families.
As home prices rise, we don't want another bubble, he said, we want something stable and steady. 'And that's why I want to lay a rock-solid foundation to make sure the kind of crisis we went through never happens again." To that end, he said, we must wind down Fannie Mae and Freddie Mac, the two companies that are not really government but not really private sector. "For too long, these companies were allowed to make huge profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag. It was "heads we win, tails you lose." "It helped to inflate this bubble in a way that ultimately killed Main Street."
He said a bipartisan group of senators is working to end these two companies (referring to the Corker-Warner bill), "And they're following four core principles for what I believe this reform should look like. "
First, private capital should take a bigger role in the mortgage market. There should be a limited government role and private lending should be the backbone of the housing market including community-based lenders "who view their borrowers not as a number, but as a neighbor."
Second, we can't leave taxpayers on the hook for irresponsibility or bad decisions by some of these lenders or Fannie Mae or Freddie Mac. "We've got to encourage the pursuit of profit, but the era of expecting a bailout after you pursue your profit and you don't manage your risk well -- well, that puts the whole country at risk. We're not going to do that anymore."
The third principle is to preserve access to safe and simple mortgage products like the 30-year, fixed-rate mortgage.
Fourth, we've got to keep housing affordable for first-time homebuyers. And that means we've got to strengthen the FHA so it gives today's families a chance to buy a home, and it preserves those rungs on the ladder of opportunity.
And we've got to support affordable rental housing and we've also got to keep up our fight against homelessness.
The president also called on Congress to immediately allow an up-or-down vote on the confirmation of James Watt, his nominee to head the Federal Housing Finance Agency (FHFA) and gave a strong endorsement to the work being done to protect homeowners by the Consumer Financial Protection Bureau.
The President concluded, "Put all these principles together, that's going to protect our entire economy and it will improve the housing market not just here in Phoenix, but throughout the state and throughout the country. We'll make owning a home a symbol of responsibility, not speculation -- a source of security for generations to come, just like it was for my grandparents."
Reaction received by MND to the President's speech has thus far been supportive. Rick Judson, chairman of the National Association of Home Builders (NAHB) said his organization applauded the President for "affirming the importance of maintaining a a federal backstop as part of efforts to revamp the housing finance system and protect the 30-year mortgage." Judson said NHAB also supports strengthening the FHA to facilitate the flow of mortgage credit to qualified home buyers, cutting red tape and easing tight credit conditions that are preventing creditworthy borrowers from obtaining home loans."
Mortgage Bankers Association (MBA) President and CEO David H. Stevens said the President's insistence on transitioning the mortgage market toward relying on private capital was of particular importance as is his apparent willingness to adopt a common securitization platform and risk-share options. Both of these, Stevens said, are key components of what MBA believes should be part of reforming the secondary mortgage market and both can be implemented now without legislation.
A statement from The Center for Responsible Lending (CRL) said, "Next steps toward a full recovery? Confirm Mel Watt to lead the Federal Housing Finance Agency, and then give the common-sense Qualified Mortgage (QM) rules time to work, and institute Qualified Residential Mortgage rules that mirror QM rules."
CRL stressed that "any entity that replaces Fannie Mae and Freddie Mac must include an explicit and paid-for government guarantee and a duty to serve the entire market. The new system must ensure that all Americans have fair access to safe and affordable 30-year fixed rate mortgage credit."
http://www.mortgagenewsdaily.com/08072013_presidential_housing_plan.asp
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***RECENT NEWS BELOW - CRUCIAL INFO FOR COMMON SHAREHOLDERS****
Barron's: "Investors ought to realize Fannie/Freddie not coming back..." http://www.benzinga.com/media/barrons/13/07/3789201/barrons-recap-fannie-and-freddie-will-fade
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****DUE-DILIGENCE REPORT FOR WEEK ENDING 08/09/2013****
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Conservative group key-votes co-sponsorship of Hensarling's housing bill By Peter Schroeder - 08/01/13 10:45 AM ET
A major conservative group is calling on Republicans to attach their names to comprehensive housing finance reform legislation pushed by Rep. Jeb Hensarling (R-Texas).
Heritage Action, the political arm of the Heritage Foundation, announced Thursday it will be including co-sponsorship of the House Financial Services Committee chairman's legislation, which would eliminate housing giants Fannie Mae and Freddie Mac in their member scorecard.
"Few entities were more responsible for the collapses of the financial system than Fannie Mae and Freddie Mac," the group said. "They represent a failed institutional model."
The legislation, which was passed by the committee down a largely party-line vote, would liquidate Fannie Mae and Freddie Mac in five years, overhaul the Federal Housing Administration, and create a new non-government, nonprofit group to oversee the private-sector buying and selling of mortgages. It would also not provide a government guarantee of future mortgages, central to complaints from Democrats about the measure.
Source:
http://thehill.com/blogs/on-the-money/1091-housing/314979-conservative-group-key-votes-cosponsorship-of-hensarlings-housing-bill-
WashingtonPost: "House bill ending Fannie/Freddie shows promise"
The politics of housing finance reform are starting to get interesting. On Wednesday, the Republican-controlled House Financial Services Committee passed the Protecting American Taxpayers and Homeowners Act.
The act would wind down Fannie Mae and Freddie Mac and replace the busted entities with — well, nothing, pretty much. For the first time in decades, no “government-sponsored enterprise” would be responsible for bundling most mortgages into marketable securities.
Under PATH, private investors would perform that function; Washington’s only role would be to supervise the quality of securitized mortgages. The Federal Housing Administration (FHA) would remain as a source of government backing for mortgages to low-income first-time homebuyers, albeit to a more limited extent than present law allows. In short, Congress now has before it a fairly pure free-market alternative to the status quo, one that is likely to pass the House if and when the Republican leadership brings it to the floor.
Opponents of the PATH Act argue that the lack of permanent government backing will deprive the market of liquidity and consequently end the 30-year fixed-rate mortgage upon which so many consumers have come to rely. One answer to that is that some 30-year fixed loans already exist without government help: These are “jumbo” mortgages too big to fit within Fannie and Freddie’s loan limits. Presumably private-sector innovation could create loan products, with 30-year terms or otherwise, appropriate for smaller borrowers as well. Also, where is it written that the U.S. economy must ensure a certain amount of liquidity for housing, of all economic sectors? A lesson of the Fannie-Freddie meltdown was that government probably had been encouraging over-investment in housing.
The PATH Act opponents’ best economic argument is that reducing the supply of government-backed securities would reduce the overall depth of the U.S. financial markets, which is one of this country’s greatest advantages in the competition for the world’s supply of capital.
Still, politics is the least refutable objection to the PATH Act — quite simply, realtors, home builders, bankers and other housing interest groups would exercise their clout to defeat it, or anything like it. Bowing to that perceived inevitability, a bipartisan group of senators offered a bill last month that would also end Fannie and Freddie but keep government in the business of insuring mortgage securities against catastrophic losses, as long as private investors paid a fee and agreed to risk a substantial amount of their own capital.
Unlike the House’s PATH Act, the Senate bill has yet to make it through committee. But between the two proposals, the debate now shapes up as a contest between a nearly pure free market and a continuing role for government that is significantly smaller and more transparent than it was. The old system is being challenged as never before, and that, in itself, represents progress.
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FIFTH DISTRICT CONGRESSMAN: Protect homeowners, taxpayers
BY ROBERT HURT 5th District Congressman | Posted: Thursday, August 1, 2013 11:08 am
Since the start of the 113th Congress, we in the House of Representatives have remained committed to advancing pro-growth policies that will promote economic recovery, encourage job creation and lower taxes.
It is my responsibility as your representative in Washington to do everything I can to make it easier for our small businesses, farmers, and individuals and families to succeed.
Part of that responsibility is to act to reform broken systems and failed, big government policies. As a member of the Financial Services Committee,
I have attended 12 hearings over the past six months examining how the actions taken by Fannie Mae and Freddie Mac have caused boom-bust cycles in the housing market, contributed to the financial crisis in 2008, and forced hardworking taxpayers to bail out the Government-Sponsored Enterprises at a cost of almost $200 billion.
Unfortunately, Dodd-Frank, which was sold to the American people as the solution to our financial system’s shortcomings, failed to address any of the problems with Fannie Mae and Freddie Mac.
Homeownership is out of reach for many Americans. Government guarantees have cost taxpayers billions of dollars. Though Fannie Mae and Freddie Mac were bailed out on the taxpayer dollar, our Main Street businesses that continue to struggle with increased federal regulations, higher taxes and the uncertainty created by the President’s health-care law were not.
At a time when the federal government supports 90 percent of new mortgage originations and remains on the hook for $5.1 trillion in mortgage guarantees, it could not be clearer that our current system is unsustainable and in need of reform.
That is why House Republicans introduced the Protecting American Taxpayers and Homeowners Act, a plan designed to protect homeowners and taxpayers.
This proposal, which was approved by the Financial Services Committee this past week, ends the taxpayer-funded bailouts of Fannie Mae and Freddie Mac, protects and refocuses the Federal Housing Administration by clearly defining its mission to serve first-time and low- to moderate-income borrowers.
It will free America’s housing markets from government distortion by implementing reforms to increase competition, enhance transparency and maximize consumer choice.
Finally, the PATH Act institutes reforms to ensure that community financial institutions, realtors, home builders, and others are not negatively affected by some of the most harmful provisions in Dodd-Frank.
We need to make homeownership more affordable in this country, and we need to do it in a responsible way that protects taxpayer dollars.
We in the House will continue to ensure that the PATH Act moves through the legislative process, and I look forward to working with my colleagues to reform our housing finance system in a meaningful way.
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Fannie Mae mortgage portfolio continues to shrink
7/31/13 4:49pm
Fannie Mae’s mortgage portfolio continued to shrink, reaching a compound annualized rate of 18.4% in June, according to the government-sponsored enterprise’s monthly summary.
The GSE’s gross mortgage portfolio also dropped, shrinking a bit each month, down 18.4%.
The book of mortgage business decreased at an annualized rate of 1.9% in June.
In addition, the conventional single-family serious delinquency rate declined six basis points to 2.77%.
The multifamily serious delinquency rate also fell two basis points to 0.28% in the latest report.
Fannie Mae completed 12,967 loan modifications in June, for a total of 83,511 loan mods in the first six months of the year.
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New Business Slows at Fannie
Jul 31, 2013 (Menafn - Mortgage Daily - McClatchy-Tribune Information Services via COMTEX) --Monthly secondary marketing activity at the Federal National Mortgage Association turned lower. Serious residential delinquency, however, fell to the lowest level in more than four years.
During June, the Washington, D.C.-based company had 72.574 billion in new business acquisitions, according to a monthly operational summary.
Activity at Fannie Mae was down from the previous month's 78.048 billion but better than the 70.572 billion reported for the same month last year.
Quarterly volume totaled 227.920 billion in the three months ended June 30, down from the first quarter's 240.043 billion. Second-quarter 2012 business totaled 194.616 billion.
During the entire first half, secondary activity amounted to 467.963 billion.
At 3.1736 trillion, the total book of business declined from 3.1787 trillion at the end of May. The book of business was 3.1834 trillion as of June 30, 2012.
Fannie said that its gross mortgage portfolio accounted for 0.5652 trillion of the latest book of business, while outstanding mortgage-backed securities made up 2.6084 trillion.
The 2.77 percent 90-day delinquency rate on residential loans was the lowest it's been since January 2009 -- a month when the rate was also 2.77 percent.
The past-due rate was 2.83 percent in May and 3.53 percent in June 2012.
The last time that the secondary lender's serious delinquency rate increased was in February 2010, when it was 5.59 percent.
Multifamily delinquency of at least 60 days fell for the fourth consecutive month to 0.28 percent in June. The multifamily portfolio had an 0.30 percent delinquency rate in May and an 0.29 percent rate in June 2012.
___ (c)2013 Mortgage Daily Visit Mortgage Daily at www.mortgagedaily.com
Distributed by MCT Information Services
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Blaine’s Bulletin by U.S. Representative Blaine Luetkemeyer Posted on Wednesday, July 31, 2013 at 10:35 am
U.S. Representative Blaine Luetkemeyer
There’s a framed editorial cartoon hanging in my district office in Jefferson City that depicts a couple – the husband is labeled Freddie Mac and his wife is labeled Fannie Mae – telling a man behind a desk who is labeled “taxpayers” the following: “We need to apply for a loan.” I’ve had that piece of artwork since the housing collapse in 2008 and the nearly $200 billion bailout for Fannie and Freddie that ensued, and it has served as a stark and constant reminder of the kind of chaos government created in the home lending market that has yet to fully recover.
That artwork was in the back of my mind recently when I had the opportunity as a member of the House Financial Services Committee to support the Protecting American Taxpayers and Homeowners (PATH) Act of 2013, a comprehensive piece of legislation that focuses on ending the costly Fannie and Freddie bailout; right-sizing the Federal Housing Administration (FHA) and clearly defining its mission; implementing market reforms to increase mortgage competition, enhance transparency, maximize consumer choice; and breaking down barriers for private investment capital.
Currently, our system of housing finance is dominated in large part by the two housing Government-Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, and other government guarantees supplied by the FHA and its loan securitizer, Ginnie Mae. Combined, the GSEs and the FHA guarantee more than 85 percent of all new mortgage originations and were responsible for more than 99 percent of all mortgage securitizations in 2012.
Such a system is unsustainable, and continuing to expose taxpayers to liabilities that are measured in the trillions of dollars is unacceptable. Moreover, this unprecedented level of government involvement is crowding out private sector capital, investment, and innovation. I believe that you deserve a better housing finance model – one that’s sustainable and built to last. It needs to be sustainable for homeowners so they can keep their homes; sustainable for you the taxpayer so that you are never again forced to fund another multi-billion dollar Washington bailout; and sustainable for our nation’s economy so we avoid the boom-bust housing cycles that have hurt so many in the past.
At its core, the housing market is no different from the market for any other asset – housing is not immune to the laws of supply and demand or risk and reward. Thus, any plan to reform our housing finance system must advance four fundamental goals essential to the development of any free market.
First, the role of government must be clearly defined and limited to protect taxpayers, prevent the crowding out of private sector participation, and eliminate moral hazard. Second, artificial barriers to private capital must be removed to attract investment and encourage innovation. Third, market participants must have clear, transparent, and enforceable rules for transactions to foster competition and restore market discipline. Lastly, consumers must be afforded choice in determining which mortgage products best suit their individual needs, free from arbitrary government restrictions that ban options or steer consumers to certain government-preferred products over others.
I believe the PATH Act is the first step in making responsible home ownership more attainable for hard-working Americans, like you, while at the same time providing safeguards from government lending chicanery.
As always, for those of you with Internet access, I encourage you to visit my official website http://luetkemeyer.house.gov. For those without access to the Internet, I encourage you to call my offices in Jefferson City (573-635-7232) Washington, Mo. (636-239-2276), or Wentzville (636-327-7055) with your questions and concerns.
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***UNDENIABLE PROOF THAT OBAMA WANTS TO DISSOLVE FANNIE***
Why would ANYONE bet on this?
(hundreds of sources listed below)
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re: Obama: "Turn the page..."
The President has made it VERY clear, since 2011, that his intent was to DISSOLVE the companies. If I remember correctly there is a White House report from Feb. 2011 that makes it very obvious that the underlying goal is to DISSOLVE the companies. DISSOLVE only means one thing. Not "tweak," not "release," not "restructure," not "rehabiliate" but DISSOLVE.
There is no reason to think that "turn the page" is anything but a reaffirmation that he still has that goal in mind. To think otherwise is completely illogical and there is ZERO evidence to support that point of view. Z E R O.
Also - Melvin Watt HIMSELF has outright endorsed recent efforts to SHUT THE COMPANIES DOWN. OBAMA IS WATT'S BIGGEST ADVOCATE..... Put the pieces together!
Here are a thousand sources verifying exactly what I just said...
https://www.google.com/#output=search&sclient=psy-ab&q=2011+obama+dissolve+fannie&oq=2011+obama+dissolve+fannie&gs_l=hp.12...2204.2204.0.4523.1.1.0.0.0.0.85.85.1.1.0....0.0..1c.1.20.psy-ab.5Ok1h6zvlsc&pbx=1&bav=on.2,or.r_cp.r_qf.&bvm=bv.49784469%2Cd.dmg%2Cpv.xjs.s.en_US.MpiVkF51mpA.O&fp=30ae1b1e5770a225&biw=1366&bih=643
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**MUST*READ*NEWS** OBAMA INDICATES HIS INTENT TO DISMANTLE F&F
(see headlines/links below)
He has said numerous times that his goal is to dismantle Fannie and Freddie. No one following this story thinks F&F will remain when all is said and done EXCEPT for those who own high priced shares. Don't be fooled friend. The only reason why pps is holding up marginally is because of the millions of shares mistakenly purchased by retail during the hedge fund promo and dump at $3+.
*****There is absolutely no reason to think this is going to pan out for common shareholders.*****
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***Bill to end Freddie Mac Clears***
(see below for link)
Where are the sources suggesting that this is a good investment?
THEY
DO
NOT
EXIST.
How to be an intelligent investor:
Step 1: Do not invest in companies that the Federal Government and the taxpaying population want and plan to SHUT DOWN.
There is NOTHING here for common shareholders. Flip the swings all you want (I do), but remember, the big picture indicates ALL SHARES ARE IN ESSENCE WORTHLESS.
I WOULD NEVER BE CAUGHT HOLDING SHARES OF FANNIE OR FREDDIE OVER NIGHT... BE SMART. DON'T FALL VICTIM TO THE HYPE!
http://www.bizjournals.com/jacksonville/news/news-wire/2013/07/24/bill-to-end-fannie-mae-freddie-mac.html
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********************LATEST NEWS**********************
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***"House bill ending Fannie and Freddie Shows Promise"***
http://www.washingtonpost.com/opinions/a-promising-congressional-debate-on-ending-fannie-and-freddie/2013/07/25/307cc99c-f482-11e2-aa2e-4088616498b4_story.html
OBAMA SPELLS OUT THE BEGINNING OF THE END FOR FANNIE, FREDDIE
http://blogs.marketwatch.com/capitolreport/2013/07/24/obama-says-its-time-to-turn-the-page-on-fannie-and-freddie/?mod=MW_latest_news
GOP BILL DISSOLVING FANNIE AND FREDDIE BACKED BY HOUSE PANEL
http://www.newsmax.com/Newsfront/fannie-freddie-house-gop/2013/07/24/id/516853
FANNIE AND FREDDIE PROFITS NOT GOING TO INVESTORS
http://seekingalpha.com/article/1568702-fannie-and-freddie-profits-not-going-to-investors?source=google_news
NC CONGRESS MEMBERS GETTING BEHIND PROPOSALS TO DISMANTLE FANNIE, FREDDIE
http://wunc.org/post/nc-congress-members-consider-bills-dismantle-fannie-freddie
HOUSE FINANCIAL SERVICES COMMITTEE PASSES BILL LIQUIDATING FANNIE AND FREDDIE
http://www.huffingtonpost.com/2013/07/24/house-fannie-freddie_n_3645608.html
This scares the crap out of me:
http://www.bloomberg.com/video/hensarling-on-plan-to-wind-down-gses-capitol-gains-z~zK6HG5QaqjafBXiYRQPw.html?cmpid=yhoo
Why is there no talk of positive outcomes for common shareholders? BECAUSE IT’S NOT GOING TO WORK OUT THE WAY COMMONS WANT.
Chairman Hensarling Opening Statement at PATH Act Hearing
July 19, 2013by RealEstateRama
WASHINGTON, D.C. – July 19, 2013 – (RealEstateRama) — Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today’s full committee hearing on the Protecting American Taxpayers and Homeowners Act:
“Today, the Financial Services Committee meets in its 12th hearing over the last six months on the need to create a sustainable housing finance system. By the end of the hearing, our committee will have heard from more than 50 witnesses on this subject since January.
“Americans clearly deserve a better housing system. One that protects homeowners and taxpayers, so that every American who works hard and plays by the rules can have opportunities and choices to buy homes they can actually afford to keep.
BB“One that protects hardworking taxpayers, so they never again have to bail out corrupt government sponsored enterprises like Fannie Mae and Freddie Mac, whose top managers engaged in extensive accounting fraud to trigger huge executive bonuses for themselves.BB
“America needs a housing policy that is sustainable over time, not one that causes endless boom-bust cycles in real estate that harms our economy.
“Regrettably, such a common sense and responsible system is not in place America in today.
“Today, taxpayers have been forced to pay nearly $200 billion for the bailout of Fannie Mae and Freddie Mac.
“Today, taxpayers remain on the hook for more than $5 trillion in mortgage guarantees, roughly one-third the size of our economy.
“Today, the federal government has a virtual monopoly on the housing finance system. That is unwise, unfair, and unsustainable.
“Today, Washington elites decide who can qualify for a mortgage. That puts homeownership out of reach for millions of credit-worthy American families. That is not fair.
“Americans truly deserve better.
“The proposal we’ll discuss today will give Americans the better, fairer, and sustainable housing finance system they deserve. It’s called the PATH Act because it Protects American Taxpayers and Homeowners.
BB“The PATH Act ends the bailout of Fannie Mae and Freddie Mac by gradually winding them down over a five-year transition period. On their best day they delivered 7 to 25 basis points interest rate advantage to homebuyers, yet only delivered mediocre rates of homeownership — contrasted with almost $200 billion of bailout; wrecked lives of those who lost their homes; artificially driving up cost of principal; and helping bring the economy to its knees. Fannie and Freddie did little to help the homebuyer but an awful lot to hurt the taxpayer and the economy.BB
“The PATH Act also protects taxpayers and homeowners by finally codifying what most everyone claims the FHA was designed to do; that is, an agency that was intended to help first-time homebuyers and those with low and moderate incomes. But instead, today they can insure millionaires’ mortgages for homes valued as high as $729,750. In many sections of my district, that’s a mansion. The mission creep has over-extended FHA. Today it is broke, unsustainable and projected to need its own taxpayer bailout, just like Fannie and Freddie. An unsustainable, bankrupt FHA will help no one. The PATH Act puts it on a sound footing.
“The PATH Act tears down barriers to private capital and frees homebuyers from a government-dominated system that puts, again, Washington elites in control of deciding who can and who cannot buy a home. Washington should not steer our citizens into mortgages that may not be right for them nor should Washington prevent them from taking out mortgages of their choosing. Reforms in the PATH Act increase competition, enhance transparency and give consumers more freedom to choose the mortgages that’s right for them as long as the terms are fully disclosed and understandable. Witnesses at our previous hearings have warned that regulations coming down the pike could increase mortgage interest rates 1 to 4 percentage points, lead to fewer home sales, and deter community banks from making mortgage loans. CoreLogic has warned that only half of today’s mortgages would comply with the bureaucratic Dodd-Frank rules that go into effect in just 177 days. Again, this is wrong and unfair.
“A significant number of members in this room have said they want to end Fannie and Freddie; they want a new system. But they want to do it up until it’s actually time to do it. And nearly five years after the bailout of Fannie and Freddie, I ask my friends on the other side of the aisle and in the Administration: If you don’t like our plan, where is your plan?
“Some say the plan will end the 30-year fixed mortgage. But it exists today without a government guarantee. Many of these same naysayers are the ones who said we had nothing to worry about with Fannie and Freddie — “Let’s roll the dice” — so thus their track record on predictions is not an enviable one.
“Some say this plan would end the federal guarantee for the housing finance system. Yet FHA, the Federal Home Loan Banks, the VA, and the rural housing programs are still there.
“Some say the PATH Act is ideological. But it seems to me that those who defend the status quo of a government-run monopoly complete with taxpayer bailouts, economic crises, and mediocre rates of homeownership are the ones that are being ideological.
FNMA:"Individual-investors-have-absolutely-no-business-playing-in-this-arena."
-Alex Dumortier, CFA
http://www.fool.com/investing/general/2013/07/10/fannie-mae-and-freddie-mac-let-the-pros-mix-it-up.aspx
"Freddie Mac, Fannie Mae common shares worth ZERO"
http://touch.valuewalk.com/valuewalk/#!/entry/waterstone-freddie-mac-fannie-mae-common-shares-worth-zero,51cdee5dda27f5d9d0ec752a
CNBC: "Retail traders could lose 100%."
"I don't think the retail trader knows what they're doing," said Stephen Weiss of Short Hills Capital Partners. "They are looking to buy a lotto ticket and not realizing they could lose 100 percent of their capital in these things."
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re: Earnings
Keep in mind folks, if we already know the numbers that will be posted in August, the market will have adjusted pps before earnings are even released. This means no one should be counting on a major boost to pps on release date.
It's also important to realize that the level of profits means, in essence, nothing for common shareholders at this point.
My prediction is that if there is a boost to pps in anticipation of earnings, it will be followed by a major dip upon release. If the numbers do not meet expectations, watch out; things WILL get ugly.
In addition I should mention that this level of profit will not sustain. My opinion is that the following quarter and those thereafter will see a substantial decrease. Deferred tax aside, If for any reason, it will be because interest rates will be on the up, and refis will fall substantially.
Be careful what you believe around here! _________________________________________________________________
Planet Money (NPR): Killing Freddie Mac
http://www.wwno.org/post/planet-money-killing-fannie-mae
Wall Street Journal:"...FANNIE, FREDDIE OUTLOOK NEGATIVE"
http://online.wsj.com/article/PR-CO-20130702-909097.html
WASHINGTON, D.C.--(ENEWSPF)--Support for Corker bill strengthens
--July 10, 2013. U.S. Senator Mark Kirk (R-Ill.) today announced his support for the Housing Finance Reform and Taxpayer Protection Act, S. 1217, led by U.S. Senators Bob Corker (R-Tenn.) and Mark Warner (D-Va.) and supported by a bipartisan group of eight members on the Senate Banking, Housing and Urban Affairs Committee. The bill would establish a new housing finance system—one void of the government-sponsored enterprises Fannie Mae and Freddie Mac that take all the private gain while exposing taxpayers to all the risk. Under the proposed legislation, the new housing finance system would be based on a greater reliance on private capital, while shielding taxpayers from loss, and maintaining a liquid mortgage marketplace
BusinessJournal (01/17/2013):"BIPARTISAN GROUP WANTS SLOW DEATH FOR FANNIE MAE, FREDDIE MAC"
According to Hagan, the new legislation would accomplish the following:
•Mandate 10% capital, upfront, for the system to protect taxpayers against future bailouts.
•Wind down Fannie Mae, Freddie Mac and the Federal Housing Finance Agency within five years of bill passage.
•Transfer appropriate utility duties and functions to the modernized, streamlined and accountable Federal Mortgage Insurance Corp., modeled in part after the FDIC.
•Establish a transparent and accountable market access fund that focuses on maintaining access to affordable rental housing, making grants to state housing agencies and conducting borrower counseling programs at the state and local level.
•Ensure institutions of all sizes have direct access to the secondary market so local banks and credit unions aren’t gobbled up by the mega banks when Fannie and Freddie are dissolved.
MMBA Voices Support For Corker-Warner Housing Finance Legislation
http://www.bankerandtradesman.com/news155658.html
Former FHFA director: "...stocks delisted for good reason.." "..hedge funds won't receive much sympathy from Capitol Hill..."
http://www.streetinsider.com/Analyst+Comments/Housing+Experts+Debate+GSE+Reform+Timeline+and+Junior+Securities+(FNMA)+(FMCC)/8426089.html
NATIONAL LAW REVIEW: ***"Fannie, Freddie GOING AWAY"***
http://www.natlawreview.com/article/are-fannie-mae-and-freddie-mac-going-away
NEWS: The Obama administration welcomes Corker's approach
Congress Debates Taking A Step Back From The Mortgage Market
http://www.kios.org/post/congress-debates-taking-step-back-mortgage-market
MARK WARNER,EIGHT OTHER SENATORS WANT DEATH-FOR-FREDDIE,FANNIE
http://www.bizjournals.com/washington/morning_call/2013/07/senator-wants-slow-death-for-fannie.html
NPR NEWS: Momentum in Washington to dismantle mortgage-giants
http://app1.kuhf.org/articles/npr1374141707-Congress-Takes-Renewed-Aim-At-Fannie-Mae,-Freddie-Mac.html
BAD NEWS!: "Uncertain Future For Fannie and Freddie"
http://wyomingpublicmedia.org/post/uncertain-future-fannie-and-freddie
"Lawmakers are serious about replacing Fannie, Freddie"
http://wyomingpublicmedia.org/post/uncertain-future-fannie-and-freddie
BusinessJournal: "Fannie,Freddie viewed with 'NEAR-TOXIC' negativity"
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**You're-wondering-why-PPS-is-falling-on-lawsuit-news?** Answer:
These big firms are filing suit because it has recently become obvious that the chance F&F will be released to shareholders any time soon is almost nonexistent. Information has surfaced that indicates the majority of powerplayers in the political realm do not favor the idea of ending conservatorship...and therefore it is extremely unlikely.
These big investment firms are hedging via litigation because they know the outlook is grim. It's as simple as that.
Before celebrating these lawsuits, as if the firms are going to "stick it to the man," one must consider the implications involved.
Such lawsuits take years upon years in the courts. If the firms expected there was any chance that F&F would be released soon, they would not waste the time or resources pursuing action.
There are a vast number of wise investors who are aware of this, and are reacting promptly...which inevitably weighs heavily on pps. Down we go.....?
Things around here get darker by the day. I hope investors around here are being smart about the risks involved with these stocks.
This is a terrible long term bet that just keeps getting worse. ________________________________________________________________
http://www.bizjournals.com/washington/breaking_ground/2013/07/fannie-mae-freddie-mac-viewed-with.html
***NEWS: Rep. Hensarling aims to SHUT-DOWN Freddie Mac***
By TODD J. GILLMAN
TODD J. GILLMAN The Dallas Morning News
Washington Bureau
tgillman@dallasnews.com
Published: 11 July 2013 08:54 PM
Updated: 11 July 2013 09:01 PM
RelatedJeb Hensarling WASHINGTON — House Republicans floated a plan Thursday to liquidate mortgage giants Fannie Mae and Freddie Mac and drastically reduce the federal role in home loans.
The plan, unveiled by House Financial Services Chairman Jeb Hensarling, R-Dallas, would end federal guarantees on home loans, even in a crisis. The near total privatization, he argued, would cut risk and create a healthier mortgage market.
“The American people want a housing policy that is focused on taxpayers, focused on homeowners — existing and would-be,” Hensarling said. “More people will have opportunities to buy homes that they can actually afford to keep.”
Democrats panned the proposal. They warned that it would threaten the housing market recovery, and make ownership costlier and harder to attain.
They also charged it would make it hard for consumers to find a 30-year fixed-rate mortgage, long a pillar of the $10 trillion U.S. housing market.
That “consigns future generations of homeowners to the types of high interest, balloon-payment mortgages that caused the financial crisis,” said Rep. Maxine Waters of California, the top Democrat on Hensarling’s committee.
At the Center for American Progress, a Democratic think tank, Julia Gordon, director of housing finance and policy, called the plan “the ultimate right-wing wish list, turning the entire mortgage market over to Wall Street lock, stock and barrel.”
Lawmakers in both parties want to abolish Fannie Mae and Freddie Mac, but there is no consensus on how to do so.
Last month, a group of four Republican senators and four Democrats proposed liquidating the companies. Unlike Hensarling’s plan, their bill would retain a key federal role in the home loan market. Fannie and Freddie would be replaced by a new government reinsurer that would cover losses in a crisis.
At the Mortgage Bankers Association, president and chief executive David Stevens has lauded the Senate approach. He was more measured on the Hensarling plan.
He called it “an important step” in the debate over the mortgage market. But he cited a need for a “limited, but explicit, government backstop to maintain stable liquidity through all market cycles.”
Fannie Mae and Freddie Mac have operated under U.S. conservatorship since 2008. They owe roughly $187 billion from a 2008 bailout.
Having returned to profitability, they have since sent the U.S. Treasury about $132 billion. Some analysts say they could repay all the bailout funds by next year.
Hensarling asserted that these dividend checks don’t amount to repayment and don’t begin to address the economic damage that Fannie and Freddie helped inflict in the last housing bust and other crises.
The companies own or back about half the home loans in the United States. They buy them from lenders, package as bonds, and guarantee against default.
Hensarling’s plan, unveiled with three of his panel’s subcommittee chairmen, would wind down the companies over five years. He plans a hearing next week and committee action by next month.“
By allowing market competition and proper capital allocation, we will ameliorate the boom-bust cycle,” Hensarling said. “We hope to take the volatility out of the market.”
The plan would replace Fannie and Freddie with a “National Mortgage Market Utility” that would absorb some of their functions. It wouldn’t buy or guarantee loans, but it would set voluntary standards for loans and privately held mortgage-backed securities.
Under the bill, borrowers whose loans would be backed by the Federal Housing Administration would have to put down at least 5 percent of the purchase price, up from 3.5 percent. Only first-time buyers and lower-income borrowers would be eligible for such loans.
The plan also would repeal elements of the 2010 Dodd-Frank law, easing capital requirements on lenders.
“We have to take a holistic approach,” Hensarling said. “The federal government has almost a virtual monopoly.”
http://www.dallasnews.com/news/politics/headlines/20130711-dallas-rep.-jeb-hensarling-aims-to-take-down-fannie-mae-freddie-mac.ece
NEWS: ***HOUSE EYES CLOSING FREDDIE MAC, FANNIE MAE***
Bad news for shareholders just keeps rolling in.
http://www.globalpost.com/dispatch/news/thomson-reuters/130711/house-republicans-eye-closing-fannie-mae-freddie-mac-five-years
Forbes: Hedge funds declare loss of hope
Hedge Fund Launches Plan B In Bid To Profit From Fannie And FreddieMove up Move down The Fannie And Freddie Penny Stock Boom Gets Crushed Nathan Vardi Forbes Staff
In recent months big and powerful hedge funds have descended on Washington, lobbying for Congress to revive Fannie Mae and Freddie Mac, the government-sponsored enterprises that have been operating out of conservatorship since the financial crisis. These hedge funds had purchased preferred shares of Fannie Mae and Freddie Mac in the hopes that their value would skyrocket under a privatization scheme of the two mortgage giants. Some of these hedge funds even bought up some of the even more speculative common shares of Fannie and Freddie, penny stocks that trade on the over the counter bulletin board.
But these hedge funds found the reception on Capitol Hill to be pretty cold. Instead, a bipartisan group of senators in late June put forward new legislation aimed at getting rid of the role Fannie Mae and Freddie Mac play in the housing market by purchasing and guaranteeing mortgages. Senators Bob Corker and Mark Warner want to replace Fannie Mae and Freddie Mac with a new Federal Mortgage Insurance Corporation, a government reinsurer of mortgage securities that would backstop private capital investment in mortgages. The legislative proposal sent both the common and preferred shares of Fannie Mae and Freddie Mac into a tailspin.
With the lobbying effort not going too well, the hedge funds trying to make big profits off of Fannie Mae and Freddie Mac are launching what amounts to Plan B: litigation. Perry Capital, a large hedge fund run by Richard Perry, a former Goldman Sachs trader, filed a 34-page complaint (which you can read below) in federal court in Washington D.C. against the federal government, claiming the government has improperly taken the massive profits Fannie Mae and Freddie Mac have recently been producing and caused tens of billions of dollars in value destruction to the holdings of private shareholders. In its fight with the federal government, Perry Capital has also retained one of the most respected advocates available, Theodore Olson, the former U.S. solicitor general.
Perry Capital’s lawsuit seeks to put an end to the government’s decision last year to take all of Fannie Mae and Freddie Mac’s profits and start a process to liquidate the companies, saying the “blatant overreach by the federal government to seize all of the companies profits at the expense of the companies and all of their private investors is unlawful and must be stopped.” Perry Capital specifically points to an amendment to the mortgage companies’ stock certificates and preferred stock purchase agreements that saw the Treasury Department purchase a new class of preferred stock, entered into in August 2012 by Treasury and the Federal Housing Finance Agency, which is the conservator of both Fannie and Freddie. The change resulted in Fannie Mae and Freddie Mac paying just about all their profits to the government as dividend payments, meaning none of those profits are flowing to private holders of the GSEs’ shares. Perry Capital claims that for various reasons neither Treasury nor FHFA had the authority to make such a change.
For Perry Capital and other hedge funds seeking riches, the litigation route will be lengthy and uncertain. For some, it might also seem disingenuous; another effort to keep Fannie Mae and Freddie Mac as vehicles that privatize gains and socializes losses. The federal government bailed out the GSEs with $187 billion of U.S. government funds during the financial crisis to keep it afloat amid a credit crunch. Perry Capital claims in its lawsuit that it purchased Fannie Mae and Freddie Mac preferred stock in 2010 “in reliance on the terms of the government preferred stock as it existed” prior to the 2012 amendment. But the Obama Administration has for years now made clear its intention of reforming and winding down Fannie Mae and Freddie Mac so some might find it hard to see how one of the nation’s biggest and most sophisticated hedge funds could claim it wasn’t put on notice with ample opportunity to unload its Fannie Mae and Freddie Mac shares in the same market in which it purchased them.
http://www.forbes.com/sites/nathanvardi/2013/07/08/hedge-fund-lauches-plan-b-in-bid-to-profit-from-fannie-and-freddie/
BE AWARE OF THIS:
"Trouble Ahead For Fannie Mae(OTCBB:FMCC) Shareholders. Despite becoming one of the most highly capitalised penny stocks on the US markets earlier this year, the Federal National Mortgage Solution (FNMA) AKA Fannie Mae has taken a hammering on government plans to privatise the institution. Understandably, shareholders, many of which were already hit hard during the 2008 bailout are waiting anxiously to see how the proposed bill will fare in the senate.
The problem for shareholders is that, ultimately, conservator-ship was the right decision for the country, it just wasn’t the right decision for investors. And this time again, it will take more than the voice of Berkowitz to sway the decision.
http://www.valuewalk.com/2013/07/fannie-mae-freddie-mac-cheated/
Credit Union Times: "Senate bill would kill the GSEs"
http://www.cutimes.com/2013/07/03/senate-bill-would-kill-the-gses
National Public Radio: "Killing Freddie Mac"
http://www.wwno.org/post/planet-money-killing-fannie-mae
"...the beneficiary should be the government, not the owners of the publicly traded shares, which by all rights should be worthless."
Source: http://articles.mcall.com/2013-06-07/opinion/mc-fannie-mae-paulson-weil-column-20130607_1_fannie-mae-fannie-and-freddie-freddie-mac
"A plan being considered in the Senate would liquidate Fannie/Freddie within five years and replace them with a government-backed reinsurance entity that would back-stop the industry but only after private investors suffer losses first."
I wouldn't touch it with a ten foot pole. One of the riskiest stocks to hold, hands down.
Source: http://www.mortgagenewsdaily.com/channels/pipelinepress/06062013-secondary-marketing-frannie.asp
"Personally, I wouldn’t bet on the shareholders of Fannie and Freddie getting their companies back anytime this decade. Although there may be long term value, nobody should count on it for grocery money anytime soon.
Source: http://www.vaildaily.com/news/6830670-113/colorswatch-colortext-nonestrokestyle-nothingtext
Why Melvin Watt will be BAD for common shareholders:
http://nlpc.org/stories/2013/06/13/fhfa-nominee-melvin-watt-would-prolong-fannie-maefreddie-mac-bailout
Link: Housing Experts Plan the End of Fannie, Freddie
'Fannie Mae and Freddie Mac will not be part of the future housing finance system. Their investment portfolios would be wound down, their securitization activities spun out into the new platform, and their guarantee functions sold to privately funded MBS insurers. Any remaining assets would be sold. Taxpayers would be repaid (to the extent possible) for their past support of Fannie and Freddie," the authors wrote.'
“...Corker-Warner is going to be the approach that eventually becomes law” U.S. Senators Offer Bill to End Fannie Mae, Freddie Mac (4)
http://www.businessweek.com/news/2013-06-24/u-dot-s-dot-senators-to-introduce-bill-to-end-fannie-mae-freddie-mac
"Analysts Envision Fannie, Freddie's End"
"Fannie Mae and Freddie Mac would not be part of the future housing finance system. Their investment portfolios would be wound down, their securitization activities spun out into the new platform, and their guarantee functions sold to privately funded MBS insurers. Any remaining assets would be sold. Taxpayers would be repaid (to the extent possible) for their past support of Fannie and Freddie," the authors wrote.
This largely reflects the thinking in Washington, where there is little political appetite to return the agencies back to private hands, even though both are now making record profits. --
http://www.nuwireinvestor.com/articles/analysts-envision-fannie-freddies-end-60880.aspx
"High probability that this goes to zero..."
Video - Are Fannie and Freddie doomed?
http://www.dailyfinance.com/2013/06/19/how-to-value-fannie-mae-stock/
MELVIN WATT & RALPH NADER DESPISE EACHOTHER? "Watt has a real chip on his shoulder about white candidates. Back in 2004, Ralph Nader, hardly a conservative, asserted that Watt belligerently confronted him, and demanded that he drop out of the presidential race as a Green Party candidate and support Democratic nominee John Kerry. According to Nader, Rep. Watt had said, "You're just another arrogant white man - telling us what we can do - it's all about your ego - another fucking arrogant white man." Nader demanded an apology from Watt, but never got one." http://nlpc.org/stories/2013/06/13/fhfa-nominee-melvin-watt-would-prolong-fannie-maefreddie-mac-bailout
The cold hard truth with Fannie and Freddie is that you could wake up one morning, look into your portfolio, and see zeros. This stock could literally be deemed worthless OVER NIGHT. No warning, no time to sell, NOTHING.
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*****10 IMPORTANT TIPS FOR FNMA*****
1) Don't blame market makers because pps is down. It's all in your head.
2) Stop trying to convince whomever that pps is going to skyrocket on earnings...it's simply not going to work like that.
3) Stop trying to convince whomever that certain news means good things for common shares. There has been NOTHING in the news that should instill confidence.
4) Don't plan on this breaking $2 any time soon.
5) Increase the reality based dialogue and foster open discussion about the negatives in play. There are a ton of them.
6) Remember that more likely than not, this will never see $5 again.
7) Understand that the past does not dictate the future.
8) Don't forget that the general consensus in Washington is that the companies will be wiped out.
9) In the future, don't invest in companies the federal government plans on shutting down.
10) In the future, don't invest in companies the federal government plans on shutting down_______________________________________________________________
imo
ABSURDLY, OUR PRESIDENT WANTS TO DO AWAY WITH FANNIE AND FREDDIE...and the media is having a field day. Is all publicity good publicity, as they say? Too early to know, but so far, no good. Despite earnings, both are still trending-down, callous to everything but negative news. Ironclad resistance levels halt any positive price action. Market wide, confidence appears nonexistent as political power players plot the methodical dismemberment of the GSEs. Analysts warn of the high probability that common shares will soon be worthless. If there was ever a time to consider these stocks a viable investment, that time has now passed. Is the party over? _______________________________________________________________
NEWS CLIP: IS FMCC A BUY?
http://www.bizjournals.com/newyork/news/2013/08/09/cory-bookers-startup-waywire-critics.html#ooid=dkd250ZDr9Ml4zUOijMjvcTkKWo-T0op
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President Calls for Ending Freddie and Fannie, Hints at HARP Expansion
President Barack Obama, speaking to an audience in Phoenix yesterday, tied his proposal reforming the U.S. housing system to both his on-going theme of shoring up the middle class and to immigration reform. Among his specific proposals were the gradual elimination of Fannie Mae and Freddie Mac and the need to insure the availability of decent and affordable rental housing.
Calling owning a home "the ultimate evidence that here in America, hard work pays off, that responsibility is rewarded," he pointed to the difference between when his grandfather was able to buy his first home with an FHA loan and the events leading up to the recent crisis. "In that earlier generation, houses weren't for flipping around, they weren't for speculation -- houses were to live in, and to build a life with." But unfortunately, he said, responsibility gave way to recklessness - and triggered a recession.
The President enumerated some of the steps that the government has already taken to reverse the decline in housing and some of the recent signs of recovery, emphasizing that housing isn't just important for the person who owns the house - it impacts the entire economy "Construction workers, contractors, suppliers, carpet makers, all these folks are impacted by the housing industry."
We've made progress, he said, but we've got to build on this progress and "turn the page on this kind of bubble-and-bust mentality that helped to create this mess in the first place. We've got to build a housing system that is durable and fair and rewards responsibility for generations to come".
There are, he said, five immediate steps that must be taken:
•Congress should pass a bill giving every homeowner the chance to save thousands of dollars a year by refinancing their mortgage at today's rates.
•We've made it harder for reckless buyers to buy homes that they can't afford now we must make it easier for qualified buyers to buy ones they can afford by simplifying overlapping regulations, cutting red tape, and giving persons who have worked hard to repair their credit a second chance.
•We must fix our broken immigration system because when more people can buy homes and play by the rules, home values go up for everybody. One recent study showed the average homeowner has already seen the value of their home boosted by thousands of dollars because of immigration.
•Rebuild the communities hardest hit by the housing crash; putting construction workers back to work repairing rundown homes, tearing down vacant properties so that the value of homes in those surrounding areas start picking up.
•Make sure families that can't or don't want to buy a home still have a decent place to rent. Instead of making everyone feel like they must own a home, even if they weren't ready let's invest in affordable rental housing. Let's bring together cities and states to address local barriers that drive up rents for working families.
As home prices rise, we don't want another bubble, he said, we want something stable and steady. 'And that's why I want to lay a rock-solid foundation to make sure the kind of crisis we went through never happens again." To that end, he said, we must wind down Fannie Mae and Freddie Mac, the two companies that are not really government but not really private sector. "For too long, these companies were allowed to make huge profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag. It was "heads we win, tails you lose." "It helped to inflate this bubble in a way that ultimately killed Main Street."
He said a bipartisan group of senators is working to end these two companies (referring to the Corker-Warner bill), "And they're following four core principles for what I believe this reform should look like. "
First, private capital should take a bigger role in the mortgage market. There should be a limited government role and private lending should be the backbone of the housing market including community-based lenders "who view their borrowers not as a number, but as a neighbor."
Second, we can't leave taxpayers on the hook for irresponsibility or bad decisions by some of these lenders or Fannie Mae or Freddie Mac. "We've got to encourage the pursuit of profit, but the era of expecting a bailout after you pursue your profit and you don't manage your risk well -- well, that puts the whole country at risk. We're not going to do that anymore."
The third principle is to preserve access to safe and simple mortgage products like the 30-year, fixed-rate mortgage.
Fourth, we've got to keep housing affordable for first-time homebuyers. And that means we've got to strengthen the FHA so it gives today's families a chance to buy a home, and it preserves those rungs on the ladder of opportunity.
And we've got to support affordable rental housing and we've also got to keep up our fight against homelessness.
The president also called on Congress to immediately allow an up-or-down vote on the confirmation of James Watt, his nominee to head the Federal Housing Finance Agency (FHFA) and gave a strong endorsement to the work being done to protect homeowners by the Consumer Financial Protection Bureau.
The President concluded, "Put all these principles together, that's going to protect our entire economy and it will improve the housing market not just here in Phoenix, but throughout the state and throughout the country. We'll make owning a home a symbol of responsibility, not speculation -- a source of security for generations to come, just like it was for my grandparents."
Reaction received by MND to the President's speech has thus far been supportive. Rick Judson, chairman of the National Association of Home Builders (NAHB) said his organization applauded the President for "affirming the importance of maintaining a a federal backstop as part of efforts to revamp the housing finance system and protect the 30-year mortgage." Judson said NHAB also supports strengthening the FHA to facilitate the flow of mortgage credit to qualified home buyers, cutting red tape and easing tight credit conditions that are preventing creditworthy borrowers from obtaining home loans."
Mortgage Bankers Association (MBA) President and CEO David H. Stevens said the President's insistence on transitioning the mortgage market toward relying on private capital was of particular importance as is his apparent willingness to adopt a common securitization platform and risk-share options. Both of these, Stevens said, are key components of what MBA believes should be part of reforming the secondary mortgage market and both can be implemented now without legislation.
A statement from The Center for Responsible Lending (CRL) said, "Next steps toward a full recovery? Confirm Mel Watt to lead the Federal Housing Finance Agency, and then give the common-sense Qualified Mortgage (QM) rules time to work, and institute Qualified Residential Mortgage rules that mirror QM rules."
CRL stressed that "any entity that replaces Fannie Mae and Freddie Mac must include an explicit and paid-for government guarantee and a duty to serve the entire market. The new system must ensure that all Americans have fair access to safe and affordable 30-year fixed rate mortgage credit."
http://www.mortgagenewsdaily.com/08072013_presidential_housing_plan.asp
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***RECENT NEWS BELOW - CRUCIAL INFO FOR COMMON SHAREHOLDERS****
Barron's: "Investors ought to realize Fannie/Freddie not coming back..." http://www.benzinga.com/media/barrons/13/07/3789201/barrons-recap-fannie-and-freddie-will-fade
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****DUE-DILIGENCE REPORT FOR WEEK ENDING 08/09/2013****
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Conservative group key-votes co-sponsorship of Hensarling's housing bill By Peter Schroeder - 08/01/13 10:45 AM ET
A major conservative group is calling on Republicans to attach their names to comprehensive housing finance reform legislation pushed by Rep. Jeb Hensarling (R-Texas).
Heritage Action, the political arm of the Heritage Foundation, announced Thursday it will be including co-sponsorship of the House Financial Services Committee chairman's legislation, which would eliminate housing giants Fannie Mae and Freddie Mac in their member scorecard.
"Few entities were more responsible for the collapses of the financial system than Fannie Mae and Freddie Mac," the group said. "They represent a failed institutional model."
The legislation, which was passed by the committee down a largely party-line vote, would liquidate Fannie Mae and Freddie Mac in five years, overhaul the Federal Housing Administration, and create a new non-government, nonprofit group to oversee the private-sector buying and selling of mortgages. It would also not provide a government guarantee of future mortgages, central to complaints from Democrats about the measure.
Source:
http://thehill.com/blogs/on-the-money/1091-housing/314979-conservative-group-key-votes-cosponsorship-of-hensarlings-housing-bill-
WashingtonPost: "House bill ending Fannie/Freddie shows promise"
The politics of housing finance reform are starting to get interesting. On Wednesday, the Republican-controlled House Financial Services Committee passed the Protecting American Taxpayers and Homeowners Act.
The act would wind down Fannie Mae and Freddie Mac and replace the busted entities with — well, nothing, pretty much. For the first time in decades, no “government-sponsored enterprise” would be responsible for bundling most mortgages into marketable securities.
Under PATH, private investors would perform that function; Washington’s only role would be to supervise the quality of securitized mortgages. The Federal Housing Administration (FHA) would remain as a source of government backing for mortgages to low-income first-time homebuyers, albeit to a more limited extent than present law allows. In short, Congress now has before it a fairly pure free-market alternative to the status quo, one that is likely to pass the House if and when the Republican leadership brings it to the floor.
Opponents of the PATH Act argue that the lack of permanent government backing will deprive the market of liquidity and consequently end the 30-year fixed-rate mortgage upon which so many consumers have come to rely. One answer to that is that some 30-year fixed loans already exist without government help: These are “jumbo” mortgages too big to fit within Fannie and Freddie’s loan limits. Presumably private-sector innovation could create loan products, with 30-year terms or otherwise, appropriate for smaller borrowers as well. Also, where is it written that the U.S. economy must ensure a certain amount of liquidity for housing, of all economic sectors? A lesson of the Fannie-Freddie meltdown was that government probably had been encouraging over-investment in housing.
The PATH Act opponents’ best economic argument is that reducing the supply of government-backed securities would reduce the overall depth of the U.S. financial markets, which is one of this country’s greatest advantages in the competition for the world’s supply of capital.
Still, politics is the least refutable objection to the PATH Act — quite simply, realtors, home builders, bankers and other housing interest groups would exercise their clout to defeat it, or anything like it. Bowing to that perceived inevitability, a bipartisan group of senators offered a bill last month that would also end Fannie and Freddie but keep government in the business of insuring mortgage securities against catastrophic losses, as long as private investors paid a fee and agreed to risk a substantial amount of their own capital.
Unlike the House’s PATH Act, the Senate bill has yet to make it through committee. But between the two proposals, the debate now shapes up as a contest between a nearly pure free market and a continuing role for government that is significantly smaller and more transparent than it was. The old system is being challenged as never before, and that, in itself, represents progress.
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FIFTH DISTRICT CONGRESSMAN: Protect homeowners, taxpayers
BY ROBERT HURT 5th District Congressman | Posted: Thursday, August 1, 2013 11:08 am
Since the start of the 113th Congress, we in the House of Representatives have remained committed to advancing pro-growth policies that will promote economic recovery, encourage job creation and lower taxes.
It is my responsibility as your representative in Washington to do everything I can to make it easier for our small businesses, farmers, and individuals and families to succeed.
Part of that responsibility is to act to reform broken systems and failed, big government policies. As a member of the Financial Services Committee,
I have attended 12 hearings over the past six months examining how the actions taken by Fannie Mae and Freddie Mac have caused boom-bust cycles in the housing market, contributed to the financial crisis in 2008, and forced hardworking taxpayers to bail out the Government-Sponsored Enterprises at a cost of almost $200 billion.
Unfortunately, Dodd-Frank, which was sold to the American people as the solution to our financial system’s shortcomings, failed to address any of the problems with Fannie Mae and Freddie Mac.
Homeownership is out of reach for many Americans. Government guarantees have cost taxpayers billions of dollars. Though Fannie Mae and Freddie Mac were bailed out on the taxpayer dollar, our Main Street businesses that continue to struggle with increased federal regulations, higher taxes and the uncertainty created by the President’s health-care law were not.
At a time when the federal government supports 90 percent of new mortgage originations and remains on the hook for $5.1 trillion in mortgage guarantees, it could not be clearer that our current system is unsustainable and in need of reform.
That is why House Republicans introduced the Protecting American Taxpayers and Homeowners Act, a plan designed to protect homeowners and taxpayers.
This proposal, which was approved by the Financial Services Committee this past week, ends the taxpayer-funded bailouts of Fannie Mae and Freddie Mac, protects and refocuses the Federal Housing Administration by clearly defining its mission to serve first-time and low- to moderate-income borrowers.
It will free America’s housing markets from government distortion by implementing reforms to increase competition, enhance transparency and maximize consumer choice.
Finally, the PATH Act institutes reforms to ensure that community financial institutions, realtors, home builders, and others are not negatively affected by some of the most harmful provisions in Dodd-Frank.
We need to make homeownership more affordable in this country, and we need to do it in a responsible way that protects taxpayer dollars.
We in the House will continue to ensure that the PATH Act moves through the legislative process, and I look forward to working with my colleagues to reform our housing finance system in a meaningful way.
________________________________________________________________
Fannie Mae mortgage portfolio continues to shrink
7/31/13 4:49pm
Fannie Mae’s mortgage portfolio continued to shrink, reaching a compound annualized rate of 18.4% in June, according to the government-sponsored enterprise’s monthly summary.
The GSE’s gross mortgage portfolio also dropped, shrinking a bit each month, down 18.4%.
The book of mortgage business decreased at an annualized rate of 1.9% in June.
In addition, the conventional single-family serious delinquency rate declined six basis points to 2.77%.
The multifamily serious delinquency rate also fell two basis points to 0.28% in the latest report.
Fannie Mae completed 12,967 loan modifications in June, for a total of 83,511 loan mods in the first six months of the year.
_________________________________________________________________
New Business Slows at Fannie
Jul 31, 2013 (Menafn - Mortgage Daily - McClatchy-Tribune Information Services via COMTEX) --Monthly secondary marketing activity at the Federal National Mortgage Association turned lower. Serious residential delinquency, however, fell to the lowest level in more than four years.
During June, the Washington, D.C.-based company had 72.574 billion in new business acquisitions, according to a monthly operational summary.
Activity at Fannie Mae was down from the previous month's 78.048 billion but better than the 70.572 billion reported for the same month last year.
Quarterly volume totaled 227.920 billion in the three months ended June 30, down from the first quarter's 240.043 billion. Second-quarter 2012 business totaled 194.616 billion.
During the entire first half, secondary activity amounted to 467.963 billion.
At 3.1736 trillion, the total book of business declined from 3.1787 trillion at the end of May. The book of business was 3.1834 trillion as of June 30, 2012.
Fannie said that its gross mortgage portfolio accounted for 0.5652 trillion of the latest book of business, while outstanding mortgage-backed securities made up 2.6084 trillion.
The 2.77 percent 90-day delinquency rate on residential loans was the lowest it's been since January 2009 -- a month when the rate was also 2.77 percent.
The past-due rate was 2.83 percent in May and 3.53 percent in June 2012.
The last time that the secondary lender's serious delinquency rate increased was in February 2010, when it was 5.59 percent.
Multifamily delinquency of at least 60 days fell for the fourth consecutive month to 0.28 percent in June. The multifamily portfolio had an 0.30 percent delinquency rate in May and an 0.29 percent rate in June 2012.
___ (c)2013 Mortgage Daily Visit Mortgage Daily at www.mortgagedaily.com
Distributed by MCT Information Services
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Blaine’s Bulletin by U.S. Representative Blaine Luetkemeyer Posted on Wednesday, July 31, 2013 at 10:35 am
U.S. Representative Blaine Luetkemeyer
There’s a framed editorial cartoon hanging in my district office in Jefferson City that depicts a couple – the husband is labeled Freddie Mac and his wife is labeled Fannie Mae – telling a man behind a desk who is labeled “taxpayers” the following: “We need to apply for a loan.” I’ve had that piece of artwork since the housing collapse in 2008 and the nearly $200 billion bailout for Fannie and Freddie that ensued, and it has served as a stark and constant reminder of the kind of chaos government created in the home lending market that has yet to fully recover.
That artwork was in the back of my mind recently when I had the opportunity as a member of the House Financial Services Committee to support the Protecting American Taxpayers and Homeowners (PATH) Act of 2013, a comprehensive piece of legislation that focuses on ending the costly Fannie and Freddie bailout; right-sizing the Federal Housing Administration (FHA) and clearly defining its mission; implementing market reforms to increase mortgage competition, enhance transparency, maximize consumer choice; and breaking down barriers for private investment capital.
Currently, our system of housing finance is dominated in large part by the two housing Government-Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, and other government guarantees supplied by the FHA and its loan securitizer, Ginnie Mae. Combined, the GSEs and the FHA guarantee more than 85 percent of all new mortgage originations and were responsible for more than 99 percent of all mortgage securitizations in 2012.
Such a system is unsustainable, and continuing to expose taxpayers to liabilities that are measured in the trillions of dollars is unacceptable. Moreover, this unprecedented level of government involvement is crowding out private sector capital, investment, and innovation. I believe that you deserve a better housing finance model – one that’s sustainable and built to last. It needs to be sustainable for homeowners so they can keep their homes; sustainable for you the taxpayer so that you are never again forced to fund another multi-billion dollar Washington bailout; and sustainable for our nation’s economy so we avoid the boom-bust housing cycles that have hurt so many in the past.
At its core, the housing market is no different from the market for any other asset – housing is not immune to the laws of supply and demand or risk and reward. Thus, any plan to reform our housing finance system must advance four fundamental goals essential to the development of any free market.
First, the role of government must be clearly defined and limited to protect taxpayers, prevent the crowding out of private sector participation, and eliminate moral hazard. Second, artificial barriers to private capital must be removed to attract investment and encourage innovation. Third, market participants must have clear, transparent, and enforceable rules for transactions to foster competition and restore market discipline. Lastly, consumers must be afforded choice in determining which mortgage products best suit their individual needs, free from arbitrary government restrictions that ban options or steer consumers to certain government-preferred products over others.
I believe the PATH Act is the first step in making responsible home ownership more attainable for hard-working Americans, like you, while at the same time providing safeguards from government lending chicanery.
As always, for those of you with Internet access, I encourage you to visit my official website http://luetkemeyer.house.gov. For those without access to the Internet, I encourage you to call my offices in Jefferson City (573-635-7232) Washington, Mo. (636-239-2276), or Wentzville (636-327-7055) with your questions and concerns.
______________________________________________________________________________
***UNDENIABLE PROOF THAT OBAMA WANTS TO DISSOLVE FANNIE***
Why would ANYONE bet on this?
(hundreds of sources listed below)
__________________________________________________________
re: Obama: "Turn the page..."
The President has made it VERY clear, since 2011, that his intent was to DISSOLVE the companies. If I remember correctly there is a White House report from Feb. 2011 that makes it very obvious that the underlying goal is to DISSOLVE the companies. DISSOLVE only means one thing. Not "tweak," not "release," not "restructure," not "rehabiliate" but DISSOLVE.
There is no reason to think that "turn the page" is anything but a reaffirmation that he still has that goal in mind. To think otherwise is completely illogical and there is ZERO evidence to support that point of view. Z E R O.
Also - Melvin Watt HIMSELF has outright endorsed recent efforts to SHUT THE COMPANIES DOWN. OBAMA IS WATT'S BIGGEST ADVOCATE..... Put the pieces together!
Here are a thousand sources verifying exactly what I just said...
https://www.google.com/#output=search&sclient=psy-ab&q=2011+obama+dissolve+fannie&oq=2011+obama+dissolve+fannie&gs_l=hp.12...2204.2204.0.4523.1.1.0.0.0.0.85.85.1.1.0....0.0..1c.1.20.psy-ab.5Ok1h6zvlsc&pbx=1&bav=on.2,or.r_cp.r_qf.&bvm=bv.49784469%2Cd.dmg%2Cpv.xjs.s.en_US.MpiVkF51mpA.O&fp=30ae1b1e5770a225&biw=1366&bih=643
___________________________________________________________
**MUST*READ*NEWS** OBAMA INDICATES HIS INTENT TO DISMANTLE F&F
(see headlines/links below)
He has said numerous times that his goal is to dismantle Fannie and Freddie. No one following this story thinks F&F will remain when all is said and done EXCEPT for those who own high priced shares. Don't be fooled friend. The only reason why pps is holding up marginally is because of the millions of shares mistakenly purchased by retail during the hedge fund promo and dump at $3+.
*****There is absolutely no reason to think this is going to pan out for common shareholders.*****
______________________________________________________________
***Bill to end Freddie Mac Clears***
(see below for link)
Where are the sources suggesting that this is a good investment?
THEY
DO
NOT
EXIST.
How to be an intelligent investor:
Step 1: Do not invest in companies that the Federal Government and the taxpaying population want and plan to SHUT DOWN.
There is NOTHING here for common shareholders. Flip the swings all you want (I do), but remember, the big picture indicates ALL SHARES ARE IN ESSENCE WORTHLESS.
I WOULD NEVER BE CAUGHT HOLDING SHARES OF FANNIE OR FREDDIE OVER NIGHT... BE SMART. DON'T FALL VICTIM TO THE HYPE!
http://www.bizjournals.com/jacksonville/news/news-wire/2013/07/24/bill-to-end-fannie-mae-freddie-mac.html
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
********************LATEST NEWS**********************
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
***"House bill ending Fannie and Freddie Shows Promise"***
http://www.washingtonpost.com/opinions/a-promising-congressional-debate-on-ending-fannie-and-freddie/2013/07/25/307cc99c-f482-11e2-aa2e-4088616498b4_story.html
OBAMA SPELLS OUT THE BEGINNING OF THE END FOR FANNIE, FREDDIE
http://blogs.marketwatch.com/capitolreport/2013/07/24/obama-says-its-time-to-turn-the-page-on-fannie-and-freddie/?mod=MW_latest_news
GOP BILL DISSOLVING FANNIE AND FREDDIE BACKED BY HOUSE PANEL
http://www.newsmax.com/Newsfront/fannie-freddie-house-gop/2013/07/24/id/516853
FANNIE AND FREDDIE PROFITS NOT GOING TO INVESTORS
http://seekingalpha.com/article/1568702-fannie-and-freddie-profits-not-going-to-investors?source=google_news
NC CONGRESS MEMBERS GETTING BEHIND PROPOSALS TO DISMANTLE FANNIE, FREDDIE
http://wunc.org/post/nc-congress-members-consider-bills-dismantle-fannie-freddie
HOUSE FINANCIAL SERVICES COMMITTEE PASSES BILL LIQUIDATING FANNIE AND FREDDIE
http://www.huffingtonpost.com/2013/07/24/house-fannie-freddie_n_3645608.html
This scares the crap out of me:
http://www.bloomberg.com/video/hensarling-on-plan-to-wind-down-gses-capitol-gains-z~zK6HG5QaqjafBXiYRQPw.html?cmpid=yhoo
Why is there no talk of positive outcomes for common shareholders? BECAUSE IT’S NOT GOING TO WORK OUT THE WAY COMMONS WANT.
Chairman Hensarling Opening Statement at PATH Act Hearing
July 19, 2013by RealEstateRama
WASHINGTON, D.C. – July 19, 2013 – (RealEstateRama) — Financial Services Committee Chairman Jeb Hensarling (R-TX) delivered the following opening statement at today’s full committee hearing on the Protecting American Taxpayers and Homeowners Act:
“Today, the Financial Services Committee meets in its 12th hearing over the last six months on the need to create a sustainable housing finance system. By the end of the hearing, our committee will have heard from more than 50 witnesses on this subject since January.
“Americans clearly deserve a better housing system. One that protects homeowners and taxpayers, so that every American who works hard and plays by the rules can have opportunities and choices to buy homes they can actually afford to keep.
BB“One that protects hardworking taxpayers, so they never again have to bail out corrupt government sponsored enterprises like Fannie Mae and Freddie Mac, whose top managers engaged in extensive accounting fraud to trigger huge executive bonuses for themselves.BB
“America needs a housing policy that is sustainable over time, not one that causes endless boom-bust cycles in real estate that harms our economy.
“Regrettably, such a common sense and responsible system is not in place America in today.
“Today, taxpayers have been forced to pay nearly $200 billion for the bailout of Fannie Mae and Freddie Mac.
“Today, taxpayers remain on the hook for more than $5 trillion in mortgage guarantees, roughly one-third the size of our economy.
“Today, the federal government has a virtual monopoly on the housing finance system. That is unwise, unfair, and unsustainable.
“Today, Washington elites decide who can qualify for a mortgage. That puts homeownership out of reach for millions of credit-worthy American families. That is not fair.
“Americans truly deserve better.
“The proposal we’ll discuss today will give Americans the better, fairer, and sustainable housing finance system they deserve. It’s called the PATH Act because it Protects American Taxpayers and Homeowners.
BB“The PATH Act ends the bailout of Fannie Mae and Freddie Mac by gradually winding them down over a five-year transition period. On their best day they delivered 7 to 25 basis points interest rate advantage to homebuyers, yet only delivered mediocre rates of homeownership — contrasted with almost $200 billion of bailout; wrecked lives of those who lost their homes; artificially driving up cost of principal; and helping bring the economy to its knees. Fannie and Freddie did little to help the homebuyer but an awful lot to hurt the taxpayer and the economy.BB
“The PATH Act also protects taxpayers and homeowners by finally codifying what most everyone claims the FHA was designed to do; that is, an agency that was intended to help first-time homebuyers and those with low and moderate incomes. But instead, today they can insure millionaires’ mortgages for homes valued as high as $729,750. In many sections of my district, that’s a mansion. The mission creep has over-extended FHA. Today it is broke, unsustainable and projected to need its own taxpayer bailout, just like Fannie and Freddie. An unsustainable, bankrupt FHA will help no one. The PATH Act puts it on a sound footing.
“The PATH Act tears down barriers to private capital and frees homebuyers from a government-dominated system that puts, again, Washington elites in control of deciding who can and who cannot buy a home. Washington should not steer our citizens into mortgages that may not be right for them nor should Washington prevent them from taking out mortgages of their choosing. Reforms in the PATH Act increase competition, enhance transparency and give consumers more freedom to choose the mortgages that’s right for them as long as the terms are fully disclosed and understandable. Witnesses at our previous hearings have warned that regulations coming down the pike could increase mortgage interest rates 1 to 4 percentage points, lead to fewer home sales, and deter community banks from making mortgage loans. CoreLogic has warned that only half of today’s mortgages would comply with the bureaucratic Dodd-Frank rules that go into effect in just 177 days. Again, this is wrong and unfair.
“A significant number of members in this room have said they want to end Fannie and Freddie; they want a new system. But they want to do it up until it’s actually time to do it. And nearly five years after the bailout of Fannie and Freddie, I ask my friends on the other side of the aisle and in the Administration: If you don’t like our plan, where is your plan?
“Some say the plan will end the 30-year fixed mortgage. But it exists today without a government guarantee. Many of these same naysayers are the ones who said we had nothing to worry about with Fannie and Freddie — “Let’s roll the dice” — so thus their track record on predictions is not an enviable one.
“Some say this plan would end the federal guarantee for the housing finance system. Yet FHA, the Federal Home Loan Banks, the VA, and the rural housing programs are still there.
“Some say the PATH Act is ideological. But it seems to me that those who defend the status quo of a government-run monopoly complete with taxpayer bailouts, economic crises, and mediocre rates of homeownership are the ones that are being ideological.
FNMA:"Individual-investors-have-absolutely-no-business-playing-in-this-arena."
-Alex Dumortier, CFA
http://www.fool.com/investing/general/2013/07/10/fannie-mae-and-freddie-mac-let-the-pros-mix-it-up.aspx
"Freddie Mac, Fannie Mae common shares worth ZERO"
http://touch.valuewalk.com/valuewalk/#!/entry/waterstone-freddie-mac-fannie-mae-common-shares-worth-zero,51cdee5dda27f5d9d0ec752a
CNBC: "Retail traders could lose 100%."
"I don't think the retail trader knows what they're doing," said Stephen Weiss of Short Hills Capital Partners. "They are looking to buy a lotto ticket and not realizing they could lose 100 percent of their capital in these things."
_______________________________________________________________
re: Earnings
Keep in mind folks, if we already know the numbers that will be posted in August, the market will have adjusted pps before earnings are even released. This means no one should be counting on a major boost to pps on release date.
It's also important to realize that the level of profits means, in essence, nothing for common shareholders at this point.
My prediction is that if there is a boost to pps in anticipation of earnings, it will be followed by a major dip upon release. If the numbers do not meet expectations, watch out; things WILL get ugly.
In addition I should mention that this level of profit will not sustain. My opinion is that the following quarter and those thereafter will see a substantial decrease. Deferred tax aside, If for any reason, it will be because interest rates will be on the up, and refis will fall substantially.
Be careful what you believe around here! _________________________________________________________________
Planet Money (NPR): Killing Freddie Mac
http://www.wwno.org/post/planet-money-killing-fannie-mae
Wall Street Journal:"...FANNIE, FREDDIE OUTLOOK NEGATIVE"
http://online.wsj.com/article/PR-CO-20130702-909097.html
WASHINGTON, D.C.--(ENEWSPF)--Support for Corker bill strengthens
--July 10, 2013. U.S. Senator Mark Kirk (R-Ill.) today announced his support for the Housing Finance Reform and Taxpayer Protection Act, S. 1217, led by U.S. Senators Bob Corker (R-Tenn.) and Mark Warner (D-Va.) and supported by a bipartisan group of eight members on the Senate Banking, Housing and Urban Affairs Committee. The bill would establish a new housing finance system—one void of the government-sponsored enterprises Fannie Mae and Freddie Mac that take all the private gain while exposing taxpayers to all the risk. Under the proposed legislation, the new housing finance system would be based on a greater reliance on private capital, while shielding taxpayers from loss, and maintaining a liquid mortgage marketplace
BusinessJournal (01/17/2013):"BIPARTISAN GROUP WANTS SLOW DEATH FOR FANNIE MAE, FREDDIE MAC"
According to Hagan, the new legislation would accomplish the following:
•Mandate 10% capital, upfront, for the system to protect taxpayers against future bailouts.
•Wind down Fannie Mae, Freddie Mac and the Federal Housing Finance Agency within five years of bill passage.
•Transfer appropriate utility duties and functions to the modernized, streamlined and accountable Federal Mortgage Insurance Corp., modeled in part after the FDIC.
•Establish a transparent and accountable market access fund that focuses on maintaining access to affordable rental housing, making grants to state housing agencies and conducting borrower counseling programs at the state and local level.
•Ensure institutions of all sizes have direct access to the secondary market so local banks and credit unions aren’t gobbled up by the mega banks when Fannie and Freddie are dissolved.
MMBA Voices Support For Corker-Warner Housing Finance Legislation
http://www.bankerandtradesman.com/news155658.html
Former FHFA director: "...stocks delisted for good reason.." "..hedge funds won't receive much sympathy from Capitol Hill..."
http://www.streetinsider.com/Analyst+Comments/Housing+Experts+Debate+GSE+Reform+Timeline+and+Junior+Securities+(FNMA)+(FMCC)/8426089.html
NATIONAL LAW REVIEW: ***"Fannie, Freddie GOING AWAY"***
http://www.natlawreview.com/article/are-fannie-mae-and-freddie-mac-going-away
NEWS: The Obama administration welcomes Corker's approach
Congress Debates Taking A Step Back From The Mortgage Market
http://www.kios.org/post/congress-debates-taking-step-back-mortgage-market
MARK WARNER,EIGHT OTHER SENATORS WANT DEATH-FOR-FREDDIE,FANNIE
http://www.bizjournals.com/washington/morning_call/2013/07/senator-wants-slow-death-for-fannie.html
NPR NEWS: Momentum in Washington to dismantle mortgage-giants
http://app1.kuhf.org/articles/npr1374141707-Congress-Takes-Renewed-Aim-At-Fannie-Mae,-Freddie-Mac.html
BAD NEWS!: "Uncertain Future For Fannie and Freddie"
http://wyomingpublicmedia.org/post/uncertain-future-fannie-and-freddie
"Lawmakers are serious about replacing Fannie, Freddie"
http://wyomingpublicmedia.org/post/uncertain-future-fannie-and-freddie
BusinessJournal: "Fannie,Freddie viewed with 'NEAR-TOXIC' negativity"
______________________________________________________________
**You're-wondering-why-PPS-is-falling-on-lawsuit-news?** Answer:
These big firms are filing suit because it has recently become obvious that the chance F&F will be released to shareholders any time soon is almost nonexistent. Information has surfaced that indicates the majority of powerplayers in the political realm do not favor the idea of ending conservatorship...and therefore it is extremely unlikely.
These big investment firms are hedging via litigation because they know the outlook is grim. It's as simple as that.
Before celebrating these lawsuits, as if the firms are going to "stick it to the man," one must consider the implications involved.
Such lawsuits take years upon years in the courts. If the firms expected there was any chance that F&F would be released soon, they would not waste the time or resources pursuing action.
There are a vast number of wise investors who are aware of this, and are reacting promptly...which inevitably weighs heavily on pps. Down we go.....?
Things around here get darker by the day. I hope investors around here are being smart about the risks involved with these stocks.
This is a terrible long term bet that just keeps getting worse. ________________________________________________________________
http://www.bizjournals.com/washington/breaking_ground/2013/07/fannie-mae-freddie-mac-viewed-with.html
***NEWS: Rep. Hensarling aims to SHUT-DOWN Freddie Mac***
By TODD J. GILLMAN
TODD J. GILLMAN The Dallas Morning News
Washington Bureau
tgillman@dallasnews.com
Published: 11 July 2013 08:54 PM
Updated: 11 July 2013 09:01 PM
RelatedJeb Hensarling WASHINGTON — House Republicans floated a plan Thursday to liquidate mortgage giants Fannie Mae and Freddie Mac and drastically reduce the federal role in home loans.
The plan, unveiled by House Financial Services Chairman Jeb Hensarling, R-Dallas, would end federal guarantees on home loans, even in a crisis. The near total privatization, he argued, would cut risk and create a healthier mortgage market.
“The American people want a housing policy that is focused on taxpayers, focused on homeowners — existing and would-be,” Hensarling said. “More people will have opportunities to buy homes that they can actually afford to keep.”
Democrats panned the proposal. They warned that it would threaten the housing market recovery, and make ownership costlier and harder to attain.
They also charged it would make it hard for consumers to find a 30-year fixed-rate mortgage, long a pillar of the $10 trillion U.S. housing market.
That “consigns future generations of homeowners to the types of high interest, balloon-payment mortgages that caused the financial crisis,” said Rep. Maxine Waters of California, the top Democrat on Hensarling’s committee.
At the Center for American Progress, a Democratic think tank, Julia Gordon, director of housing finance and policy, called the plan “the ultimate right-wing wish list, turning the entire mortgage market over to Wall Street lock, stock and barrel.”
Lawmakers in both parties want to abolish Fannie Mae and Freddie Mac, but there is no consensus on how to do so.
Last month, a group of four Republican senators and four Democrats proposed liquidating the companies. Unlike Hensarling’s plan, their bill would retain a key federal role in the home loan market. Fannie and Freddie would be replaced by a new government reinsurer that would cover losses in a crisis.
At the Mortgage Bankers Association, president and chief executive David Stevens has lauded the Senate approach. He was more measured on the Hensarling plan.
He called it “an important step” in the debate over the mortgage market. But he cited a need for a “limited, but explicit, government backstop to maintain stable liquidity through all market cycles.”
Fannie Mae and Freddie Mac have operated under U.S. conservatorship since 2008. They owe roughly $187 billion from a 2008 bailout.
Having returned to profitability, they have since sent the U.S. Treasury about $132 billion. Some analysts say they could repay all the bailout funds by next year.
Hensarling asserted that these dividend checks don’t amount to repayment and don’t begin to address the economic damage that Fannie and Freddie helped inflict in the last housing bust and other crises.
The companies own or back about half the home loans in the United States. They buy them from lenders, package as bonds, and guarantee against default.
Hensarling’s plan, unveiled with three of his panel’s subcommittee chairmen, would wind down the companies over five years. He plans a hearing next week and committee action by next month.“
By allowing market competition and proper capital allocation, we will ameliorate the boom-bust cycle,” Hensarling said. “We hope to take the volatility out of the market.”
The plan would replace Fannie and Freddie with a “National Mortgage Market Utility” that would absorb some of their functions. It wouldn’t buy or guarantee loans, but it would set voluntary standards for loans and privately held mortgage-backed securities.
Under the bill, borrowers whose loans would be backed by the Federal Housing Administration would have to put down at least 5 percent of the purchase price, up from 3.5 percent. Only first-time buyers and lower-income borrowers would be eligible for such loans.
The plan also would repeal elements of the 2010 Dodd-Frank law, easing capital requirements on lenders.
“We have to take a holistic approach,” Hensarling said. “The federal government has almost a virtual monopoly.”
http://www.dallasnews.com/news/politics/headlines/20130711-dallas-rep.-jeb-hensarling-aims-to-take-down-fannie-mae-freddie-mac.ece
NEWS: ***HOUSE EYES CLOSING FREDDIE MAC, FANNIE MAE***
Bad news for shareholders just keeps rolling in.
http://www.globalpost.com/dispatch/news/thomson-reuters/130711/house-republicans-eye-closing-fannie-mae-freddie-mac-five-years
Forbes: Hedge funds declare loss of hope
Hedge Fund Launches Plan B In Bid To Profit From Fannie And FreddieMove up Move down The Fannie And Freddie Penny Stock Boom Gets Crushed Nathan Vardi Forbes Staff
In recent months big and powerful hedge funds have descended on Washington, lobbying for Congress to revive Fannie Mae and Freddie Mac, the government-sponsored enterprises that have been operating out of conservatorship since the financial crisis. These hedge funds had purchased preferred shares of Fannie Mae and Freddie Mac in the hopes that their value would skyrocket under a privatization scheme of the two mortgage giants. Some of these hedge funds even bought up some of the even more speculative common shares of Fannie and Freddie, penny stocks that trade on the over the counter bulletin board.
But these hedge funds found the reception on Capitol Hill to be pretty cold. Instead, a bipartisan group of senators in late June put forward new legislation aimed at getting rid of the role Fannie Mae and Freddie Mac play in the housing market by purchasing and guaranteeing mortgages. Senators Bob Corker and Mark Warner want to replace Fannie Mae and Freddie Mac with a new Federal Mortgage Insurance Corporation, a government reinsurer of mortgage securities that would backstop private capital investment in mortgages. The legislative proposal sent both the common and preferred shares of Fannie Mae and Freddie Mac into a tailspin.
With the lobbying effort not going too well, the hedge funds trying to make big profits off of Fannie Mae and Freddie Mac are launching what amounts to Plan B: litigation. Perry Capital, a large hedge fund run by Richard Perry, a former Goldman Sachs trader, filed a 34-page complaint (which you can read below) in federal court in Washington D.C. against the federal government, claiming the government has improperly taken the massive profits Fannie Mae and Freddie Mac have recently been producing and caused tens of billions of dollars in value destruction to the holdings of private shareholders. In its fight with the federal government, Perry Capital has also retained one of the most respected advocates available, Theodore Olson, the former U.S. solicitor general.
Perry Capital’s lawsuit seeks to put an end to the government’s decision last year to take all of Fannie Mae and Freddie Mac’s profits and start a process to liquidate the companies, saying the “blatant overreach by the federal government to seize all of the companies profits at the expense of the companies and all of their private investors is unlawful and must be stopped.” Perry Capital specifically points to an amendment to the mortgage companies’ stock certificates and preferred stock purchase agreements that saw the Treasury Department purchase a new class of preferred stock, entered into in August 2012 by Treasury and the Federal Housing Finance Agency, which is the conservator of both Fannie and Freddie. The change resulted in Fannie Mae and Freddie Mac paying just about all their profits to the government as dividend payments, meaning none of those profits are flowing to private holders of the GSEs’ shares. Perry Capital claims that for various reasons neither Treasury nor FHFA had the authority to make such a change.
For Perry Capital and other hedge funds seeking riches, the litigation route will be lengthy and uncertain. For some, it might also seem disingenuous; another effort to keep Fannie Mae and Freddie Mac as vehicles that privatize gains and socializes losses. The federal government bailed out the GSEs with $187 billion of U.S. government funds during the financial crisis to keep it afloat amid a credit crunch. Perry Capital claims in its lawsuit that it purchased Fannie Mae and Freddie Mac preferred stock in 2010 “in reliance on the terms of the government preferred stock as it existed” prior to the 2012 amendment. But the Obama Administration has for years now made clear its intention of reforming and winding down Fannie Mae and Freddie Mac so some might find it hard to see how one of the nation’s biggest and most sophisticated hedge funds could claim it wasn’t put on notice with ample opportunity to unload its Fannie Mae and Freddie Mac shares in the same market in which it purchased them.
http://www.forbes.com/sites/nathanvardi/2013/07/08/hedge-fund-lauches-plan-b-in-bid-to-profit-from-fannie-and-freddie/
BE AWARE OF THIS:
"Trouble Ahead For Fannie Mae(OTCBB:FMCC) Shareholders. Despite becoming one of the most highly capitalised penny stocks on the US markets earlier this year, the Federal National Mortgage Solution (FNMA) AKA Fannie Mae has taken a hammering on government plans to privatise the institution. Understandably, shareholders, many of which were already hit hard during the 2008 bailout are waiting anxiously to see how the proposed bill will fare in the senate.
The problem for shareholders is that, ultimately, conservator-ship was the right decision for the country, it just wasn’t the right decision for investors. And this time again, it will take more than the voice of Berkowitz to sway the decision.
http://www.valuewalk.com/2013/07/fannie-mae-freddie-mac-cheated/
Credit Union Times: "Senate bill would kill the GSEs"
http://www.cutimes.com/2013/07/03/senate-bill-would-kill-the-gses
National Public Radio: "Killing Freddie Mac"
http://www.wwno.org/post/planet-money-killing-fannie-mae
"...the beneficiary should be the government, not the owners of the publicly traded shares, which by all rights should be worthless."
Source: http://articles.mcall.com/2013-06-07/opinion/mc-fannie-mae-paulson-weil-column-20130607_1_fannie-mae-fannie-and-freddie-freddie-mac
"A plan being considered in the Senate would liquidate Fannie/Freddie within five years and replace them with a government-backed reinsurance entity that would back-stop the industry but only after private investors suffer losses first."
I wouldn't touch it with a ten foot pole. One of the riskiest stocks to hold, hands down.
Source: http://www.mortgagenewsdaily.com/channels/pipelinepress/06062013-secondary-marketing-frannie.asp
"Personally, I wouldn’t bet on the shareholders of Fannie and Freddie getting their companies back anytime this decade. Although there may be long term value, nobody should count on it for grocery money anytime soon.
Source: http://www.vaildaily.com/news/6830670-113/colorswatch-colortext-nonestrokestyle-nothingtext
Why Melvin Watt will be BAD for common shareholders:
http://nlpc.org/stories/2013/06/13/fhfa-nominee-melvin-watt-would-prolong-fannie-maefreddie-mac-bailout
Link: Housing Experts Plan the End of Fannie, Freddie
'Fannie Mae and Freddie Mac will not be part of the future housing finance system. Their investment portfolios would be wound down, their securitization activities spun out into the new platform, and their guarantee functions sold to privately funded MBS insurers. Any remaining assets would be sold. Taxpayers would be repaid (to the extent possible) for their past support of Fannie and Freddie," the authors wrote.'
“...Corker-Warner is going to be the approach that eventually becomes law” U.S. Senators Offer Bill to End Fannie Mae, Freddie Mac (4)
http://www.businessweek.com/news/2013-06-24/u-dot-s-dot-senators-to-introduce-bill-to-end-fannie-mae-freddie-mac
"Analysts Envision Fannie, Freddie's End"
"Fannie Mae and Freddie Mac would not be part of the future housing finance system. Their investment portfolios would be wound down, their securitization activities spun out into the new platform, and their guarantee functions sold to privately funded MBS insurers. Any remaining assets would be sold. Taxpayers would be repaid (to the extent possible) for their past support of Fannie and Freddie," the authors wrote.
This largely reflects the thinking in Washington, where there is little political appetite to return the agencies back to private hands, even though both are now making record profits. --
http://www.nuwireinvestor.com/articles/analysts-envision-fannie-freddies-end-60880.aspx
"High probability that this goes to zero..."
Video - Are Fannie and Freddie doomed?
http://www.dailyfinance.com/2013/06/19/how-to-value-fannie-mae-stock/
MELVIN WATT & RALPH NADER DESPISE EACHOTHER? "Watt has a real chip on his shoulder about white candidates. Back in 2004, Ralph Nader, hardly a conservative, asserted that Watt belligerently confronted him, and demanded that he drop out of the presidential race as a Green Party candidate and support Democratic nominee John Kerry. According to Nader, Rep. Watt had said, "You're just another arrogant white man - telling us what we can do - it's all about your ego - another fucking arrogant white man." Nader demanded an apology from Watt, but never got one." http://nlpc.org/stories/2013/06/13/fhfa-nominee-melvin-watt-would-prolong-fannie-maefreddie-mac-bailout
The cold hard truth with Fannie and Freddie is that you could wake up one morning, look into your portfolio, and see zeros. This stock could literally be deemed worthless OVER NIGHT. No warning, no time to sell, NOTHING.
____________________________________________________________
*****10 IMPORTANT TIPS FOR FNMA*****
1) Don't blame market makers because pps is down. It's all in your head.
2) Stop trying to convince whomever that pps is going to skyrocket on earnings...it's simply not going to work like that.
3) Stop trying to convince whomever that certain news means good things for common shares. There has been NOTHING in the news that should instill confidence.
4) Don't plan on this breaking $2 any time soon.
5) Increase the reality based dialogue and foster open discussion about the negatives in play. There are a ton of them.
6) Remember that more likely than not, this will never see $5 again.
7) Understand that the past does not dictate the future.
8) Don't forget that the general consensus in Washington is that the companies will be wiped out.
9) In the future, don't invest in companies the federal government plans on shutting down.
10) In the future, don't invest in companies the federal government plans on shutting down_______________________________________________________________
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