Luke 532

Pro-tip: If you're going to continue talking trash to a well-respected member of the community, at least learn how to spell "Whelan." You are tarnishing any reputation you may have had each time you post. Mostly due to the content of your posts, with the cherry on top of not knowing how to spell.

That is entirely incorrect and uncalled for... Christian Herzeca is one of the most well-respected and most valuable members of this entire community.

Here is a suggestion for the weekend: let’s all be very very quiet and let JPM, MS, and Houlihan do their jobs as they interact with the Treasury, FHFA, and the sources of capital for recapitalization. They get paid when we get paid. Just a thought.

Wow, that is crushing. Thank you for sharing. Will be praying for his family.

Freddie hires JP Morgan Fannie hires Morgan Stanley

SCOOP: Advisers to @JoeBiden say if former VP elected prez he will remove @MarkCalabria from FHFA, stall plans to recap, release @FannieMae @FreddieMac; Calabria said to be planning for a poss Biden victory. more now @FoxBusiness

+1 to both comments above

Interesting. FNMAH and FNMAJ are 2 of the 3 series I own (FNMFN being the 3rd). Combination of a lawyer (I think it was David Thompson) suggesting possibility of being paid dividends for previous years, Tim Pagliara suggesting a haircut, and Wiggins (I think it was him) alluding to possibility of 60% + 6 years.

Be careful, Survivor. If scenario 1 below plays out things like FNMAP will be awful. Not as bad with scenario 2, but won't do as well as higher div prefs. With that said, gun to my head I bet all prefs convert at same percentage of par (probably 85-100%). I used to own a large chunk of FMCCL but currently I have zero interest in owning the super-low dividend issues due to the reasons below...

FHFA Publishes Credit Risk Transfer Tool based on Re-Proposed Capital Rule for the Enterprises http://ow.ly/YRJG50zWEoY

FHFA Announces Public Webinar on Re-Proposed Capital Rule for the Enterprises on June 4 at 2:00pm EDT https://t.co/ajqifPP6sP

Howard's latest... https://howardonmortgagefinance.com/2020/05/27/now-we-know/

Very well stated, orthopa.

Cap rule is out: 2.5% minimum, ~$200B total FHFA Releases Re-Proposed Capital Rule for the Enterprises http://ow.ly/cM1A50zLyie

You read my mind. I, too, would be interested if anybody has thoughts on a good hedge.

I don't see the direct connection to Fannie/Freddie, am I missing something?

From Peter A. Chapman... Under seal this afternoon, Chief Judge Sweeney entered her opinion and order on the government's motion to dismiss the Fisher and Reid Plaintiffs' complaints. The court docket indicates Judge Sweeney denied the government's motion to dismiss and denied the Fisher and Reid Plaintiffs' motion to lift the stay. The court docket also indicates any motion to certify an interlocutory appeal to the Federal Circuit must be filed by May 118.

Very interesting, thanks. Gonna run some numbers...

^^^ With that said, I fully expect all series to be converted at/near par regardless of dividend rate. I just wanted to cover my backside in case any of the scenarios above play out. Those buying prefs based solely on discount to par, in all likelihood, will do best.

I used to think the same thing, but I've changed my opinion. I previously owned FMCCL but switched to the more expensive (based on percentage of par) FNMAH about 6 months ago. Currently, I own FNMAH and FNMFN in roughly equal dollar amounts. I'm not necessarily saying any of the following are going to happen, but the real possibility is enough to at least think twice (especially points 1 and 2 below). My reasons for changing my opinion are below... (1) If nothing was done other than turning on the dividends for lower dividend prefs, like FMCCL with it's 1.54% coupon, where do you think they'd trade in relation to par? Let's say the yield is 4%, that puts the price of FMCCL at $20 (40% of par). That would be awful if an investor is expecting at or near par. (2) There has been talk of converting at 60% of par plus back-interest paid for 6 years. Yes, I'm aware they are non-cumulative but anything can happen in a negotiated settlement. FMCCL (1.54%): ($50 * 60%) + (1.54% * $50 * 6 years) = $34.62/share... or 69.2% of par. FNMAH (4.5%): ($25 * 60%) + (4.5% * $25 * 6 years) = $21.75/share... or 87% of par. FNMFN (7%): ($50 * 60%) + (7% * $50 * 6 years) = $51.00/share... or 102% of par. (3) Fannie is expected to exit conservatorship via consent decree up to 6 months before Freddie exits because they have more capital built up. Therefore, people might be more willing to buy Fannie prefs. (4) Some investors don't want to switch back and forth within the preferred issues due to long-term capital gains tax status. It's a tough pill to swallow to start that year-long clock over again.

One fund is looking to raise $100,000,000 to buy junior prefs https://www.hfalert.com/search.pl?ARTICLE=189387

https://www.insidemortgagefinance.com/articles/217942-fanniefreddie-to-pay-servicers-a-500-fee-related-to-covid-forbearance?v=preview The government-sponsored enterprises plan to pay servicers a $500 fee (per loan) to help with forbearance-related issues, according to Jack Navarro, president of Shellpoint Mortgage Servicing. While the fee hasn’t been announced yet, Navarro provided certain details Tuesday morning during New Residential Investment’s earnings call. (Shellpoint is a subsidiary of the publicly traded REIT.) He said the $500 deferment fee is scheduled to take effect on July 1, pending approval from the Federal Housing Finance Agency. Servicers have seen a surge in forbearance requests due to issues stemming from the coronavirus. “The idea would be to allow borrowers to very quickly go from the forbearance process to a current loan with payments deferred to the end of the mortgage, minimize disruption and maximize the speed to process,” Navarro said. He added that a certain number of borrowers that receive forbearance are going to need full loan modifications and the GSEs and FHFA are still discussing some issues for that process. For the full story, see the next edition of Inside Mortgage Finance, available Thursday afternoon.

GSE's paying $500 per loan, why? What a waste. Even at just 2M loans that's 1B. "The government-sponsored enterprises plan to pay servicers a $500 fee (per loan) to help with forbearance-related issues, according to Jack Navarro, president of #Shellpoint Mortgage Servicing." $NRZ @IMFpubs

First Quarter Takeaways, Timothy Howard https://howardonmortgagefinance.com/2020/05/05/first-quarter-takeaways/