Replies to post #391719 on Fannie Mae-No Politics (FNMA)

[Donotunderstand]

again fun to read

with regard to ability to "cover"

1. Guarantee fees I assume help cover obligations related to default - in a non one to one relationship. Guarantee fees collected now - if needed - help cover the interest and principal obligations incurred in prior years where there is lack of incoming payments from the mortgage holders

2. As a percentage of annual obligation - what are the guarantee fees ? And do they not also cover tons of normal operating expenses

3. Other sources of income - capital (although that would be a loss year in a cycle) and I assume a profit in the buying and selling of the paper. I have always assumed that FNMA pays the originating banks less than FNMA collects from the underlying MBS principal and interest payments. I assumed F and F charged a price (paid less) sufficient to cover risk and operating costs.

Frankly I thought the guarantee fee was the gravy?

(and sales of defaulted property for amounts > obligation owed are a source of income. While such overage goes to the borrower and the issuing bank as well as F and F - I always assumed there was a lot of gravy here

?