Replies to post #115184 on Fannie Mae-No Politics (FNMA)

[DangrSeekr]

Great post! Really! At least someone looking behind the scenes... and having a realistic view.

I guess the lack of stimulus would be bad for FnF right now as it would/will be for everyone
else and that the amendment was made to prevent the printed money to leak to investors.

Some kind of dilemma!? :-D

[philipmax]

bmp152, Great observation. I too have been giving this QE3 a jaded view. The only difference, as I see it, is that the $85B goes directly to the banks to extricate them from illiquid positions.By purchasing the garbage on their books at par, the Fed is hoping that the banks will release this "reserve for loss" provision on the balance sheet. This maneuver generate immediate profit to the BANKS and should stimulate lending (should not would). How are FNF affected here depends whether the FED keeps these mtgs on its own books or discounts them again for FNF benefit. Otherwise I don't see the FNF play in the QE3. Please clarify. Thanks in advance.

[cfljmljfl]

That is the old chicken or the egg story.

You are correct but the fed is purchasing the MBS because there is no market. When FnF are released from cship, a market for MBS will bloom. The reason is the market will be assured of a business model that works will be in place. And will be business as usual.

"In my opinion, there's no way that the FHFA conservator can reliably claim financial solvency of FnF until the government begins to taper their quantitative easing policy.

As it stands now, the government is dumping $85B (with a B!) a month into bond-buying, much of those bonds go toward purchasing repackaged mortgage-backed securities from FnF. The QE policy also likely explains the sudden rise in profitability of these companies.

I'm by no means saying that FnF's return to profitability isn't impressive, the profits are outstanding, and their book of business is clearly improving. But I just can't see how anybody could have the lack of foresight to declare solvency at this time. Take that $85B stimulus per month away and then see how they fare... As a long shareholder, I hope very well!"

[Sogo]

QE was what attracted me to fnma in the first place, so I would agree with you. I figured that so much printed money will cause the housing market to catch fire again, etc, and that fnma would benefit greatly from it.

Even if the Fed tapers, they'll still taper down only a little and they'll be still buying tons of mbs.

Not that I am in favor of QE or anything the Fed does, but I played according to what I thought would happen and it did. Now if the political side would sort things out in out favor....