Cox022

Good point, and at multiple times during the interview too.

Calabria on the Cato Institute Daily podcast. https://www.cato.org/multimedia/cato-daily-podcast/mortgage-markets-covid-19?utm_source=dlvr.it&utm_medium=twitter Nothing groundbreaking but a solid 6-7 minutes of Calabria talking about the GSE's, starting at 19:30. some rough notes, part quote, part paraphrase: -2021/2022 they may do some sort of public offering -How GSE's raise capital is up to them, I just set the rules and mileposts -They can either build earnings, sell off assets, or raise public or private capital -they've hired advisors, it's early, everything is on the table -we are talking hundreds of billions of dollars at the end of the day that need to be reaised by retained earnings, public or private offerings -potentially largest public offerings in history and certainly not something done in a short amount of time -I'm an independent regulator, my term runs to 2024, I have every intention of serving that term -I hope my successor, because I think I am just carrying out the laws as congress decided it, I'd like to think my successor will take the same perspective -in my 15 months here the dialogue around this has really changed [to follow the law instead of sticking to conservatorship limbo], and quickly, it's heartening, and I hope that sticks -I'll add a caveat that it will be very, very difficult to raise capital if we see housing market have a big decline or the equity markets have a big decline

Can someone correct me if I've got this wrong? (1) Currently, FHFA is constitutional and FHFA director cannot be fired at will. (2) If Seila rules CFPB unconstitutional, then FHFA unconstitutional as well, and CFPB/FHFA directors can be fired at will. If (2) occurs and Trump loses, Calabria is out in Q1 2021. If (2) doesn't occur and Trump loses, Calabria remains FHFA director until his term ends in 2024. If Trump wins, Calabria remains FHFA director regardless. Intelligent legal analysis suggests SCOTUS will *very likely* rule CFPB unconstitutional sometime this summer. There are reasons to be hopeful, but it's still *very uncertain*, that SCOTUS grants relief we want in Seila. [thanks to rolg's past work, which can be reviewed here: https://tinyurl.com/y9odyjka . May be worthwhile since Seila ruling expected soon (i think)]

Jamie Dimon yesterday on forbearance: ○ 1/3 of people who ask for it, never actually use it ○ I suspect a lot of people who did use it are doing so as a safety precaution ○ My hope would be, as we see first people coming off forbearance, that the people who start repaying is higher than people think, not lower § This by the way gives them a chance to do a re-fi, which could be really smart for them in certain cases ○ We will start to see the first cohort of people coming off of forbearance in June ○ In the old days, it was a danger that once you stopped paying your mortgage, you never started again § But remember last time around, home prices were down 40%, there was a good reason not to pay, you weren't going to lose any equity value in your home, whereas today, it’s the opposite, there are very few people underwater in their homes today

A little more:

small snippet from FNMA 10-q:

marketwatch: Fannie Mae, Freddie Mac to roll out new mortgage-payment deferral option for homeowners facing financial trouble https://www.marketwatch.com/story/fannie-mae-freddie-mac-to-roll-out-new-mortgage-payment-deferral-option-for-homeowners-facing-financial-trouble-2020-03-27?siteid=yhoof2&yptr=yahoo Sorry for all the text but I thought it was good, clear info.

Thanks for the bloomberg screenshot. I cant help but notice it reads that the GSE's 'might have to operate under consent decrees.' If that is in fact a quote, I wonder under what circumstances would the GSE's 'have' to operate under consent decrees. My first reaction is that this indicates Calabria is in a hurry, but I'm not 100% sure if I'm thinking about that correctly yet. The wording of the ACG analytics tweet is different by suggesting they 'could' be released with a consent decree. I'm reading too much into it but I guess I'm just antsy for useful information!

Thanks for the comments, Wiggins. Seems like poor form, at a minimum, for VW to be so vague. Separately, I've read that Calabria, Mnuchin, and Carson are expected to testify in front of the House Financial Services Committee towards the end of this month. I don't think that's been nailed down quite yet so keep an eye out for that.

https://www.valuewalk.com/2019/10/fannie-mae-freddie-mac-preferred-shares/ I suppose it was a Bove note that came out 3ish days ago that may explain the price drops. I dont have the actual report. I think the risk of a footprint reduction is minimized because I don't think Calabria or anyone else in DC has the guts to do anything to make it harder for Americans to buy a home. As it relates to delays, any long term GSE investor knows that a slower than expected timeline is a risk. Bove does a good job embodying a short term investor; by the time the skies clear and he reacts by recommending the securities again (which he already admits are really attractive over the long term...go figure) they will be less attractively priced than they are today.

Referring to the Fannie Mae letter agreement text in above link... Does part III refer to a future amendment to the PSPA?...The big one we are all looking forward to? If so, I wonder why this language was put into this letter agreement; any thoughts on that?

Every once in a while someone (snarky maybe) asks: what could go wrong, what is the downside? I'd love to hear your answers...For argument's sake: if we knew 2 years from now we would be really disappointed, what would you say is the most likely cause? My top answer, as most likely, is Treasury for whatever reason never gets around to making the big changes to the PSPA and status quo continues. This seems more likely to me than the actual recapitalization being disappointing. Hence, I'm quite bullish but constantly worried if I'm missing something.

Thanks Luke. I missed it, can someone post a link when available?

I found this word choice interesting as well, using "amendment"... could the amendment be done this month instead of simply replacing sweep with commitment fee? Could things on the amendment be done prior to December? Very interesting if so, but probably he wasn't choosing his words carefully and he just meant NWS replaced by commitment fee... https://www.reuters.com/article/us-usa-treasury-housing/u-s-treasury-eyes-action-on-fannie-mae-freddie-mac-by-months-end-mnuchin-idUSKCN1VX1NM “That’s something that the FHFA (Federal Housing Finance Agency) and we are working on. We are actively negotiating an amendment, and I think our objective is to try to get it done by the end of the month,” Mnuchin told CNBC in an interview. https://www.wsj.com/articles/trump-appointed-official-promises-full-push-to-overhaul-plumbing-of-mortgage-market-11555938001 This was from April, just FYI. Not sure what to conclude, if anything.

Just pointing out peculiar word choice and phrasing from Mnuchin on CNBC today at 12:00. https://www.cnbc.com/2019/09/12/treasury-secretary-mnuchin-says-trump-has-approved-reform-plan-for-fannie-mae-and-freddie-mac.html?__source=sharebar|twitter&par=sharebar The simplest explanation is that he just meant 'compensation for deferred or forgone dividends' but I thought I'd point that out in case anyone else saw a different meaning.