blackcoffee

Just so you know. I can model things myself. Familiar with Intex? I am. So while yes they pointed it out, I can verify it myself. Believe me or not. I truly don't care. What you and others should be asking, is "why is the FHFA mandating products that are structurally flawed?" And yes while I understand that there may be motivations to shoot the messengers here, there are 0 dissenting voices or really anyone that has asked about what happens with these products in a downturn OTHER than those two and Parsons at Moelis, because no one is paid to do so. Howard actually addresses that on his blog. I'll let you dig around and find it. And if you actually are John Carney I'm wasting my time, because in that case, you're possibly the worst journalist to ever claim to be one and are already bought. Joe Light coming in a close 2nd. Have a nice day.

. Hey it's me - someone who understands how CRTs work - turns out they don't really. They are essentially giving money away to their buyers at risk premiums that do not align with the risk actually being taken, which of course is up for debate on how you model it (by design), but the former CFO of one of the companies now issuing them wouldn't be doing so if he were still in charge because, as he notes, you're giving away too much $ for the amount of risk being mitigated. The problem is that no one can tell because the market has only been going up. As Rosner et al have noted - CRTs are counter-cyclical. Meaning that when the cycle enters a downturn no one who is currently buying them will continue to do so. So then all the risk will flow back to the GSEs and they will have already given away the amount of capital they should have kept in the equity position (the set up pre-conservitorship) but since these guys are all self serving frauds that were put in by all the people trying to cover this up and give the market to the banks, they go along with it because the need to get paid too. And if they're willing to strong arm the BoD in 2008 into essentially a mob loan, what's to stop them from pressuring their current mgmt (who was replaced by the frauds) to do whatever they want. Which will further work to their ends of blaming the GSEs for privatized losses in the future when no one buys the CRTs in a downturn thus giving the gov't (but really the banks) ever more ammo to claim that the GSEs are a failed biz model or whatever horseshit they're going to say. And most people, including the politicians won't know it or won't admit they know it because they're getting paid too. So yeah they're a scam and the people buying it won't say it becuase they know they're getting paid and the people selling it want the GSEs to fail long term so they're pushing it hard. And no one anywhere is scrutinizing it because all the 'research' on it is coming from where? oh right the banks selling them. So la la la the fraud continues. Have a nice day. I think the GSE’s work better under conversatorship than as private or private public enterprises. Their capital levels (essentially zero right now) don’t matter and if they make losses in a downturn, they have an infinite credit line from the Fed that they can rely on. So there can’t be a run in the bank. Problem solved. Keep things exactly the way they are, in this case the limbo status is the best case scenario for all stakeholders, except the shareholders of old of course That's nice. It's not well thought out or accurate. But it's nice that you think that.

Hey it's me - someone who understands how CRTs work - turns out they don't really. They are essentially giving money away to their buyers at risk premiums that do not align with the risk actually being taken, which of course is up for debate on how you model it (by design), but the former CFO of one of the companies now issuing them wouldn't be doing so if he were still in charge because, as he notes, you're giving away too much $ for the amount of risk being mitigated. The problem is that no one can tell because the market has only been going up. As Rosner et al have noted - CRTs are counter-cyclical. Meaning that when the cycle enters a downturn no one who is currently buying them will continue to do so. So then all the risk will flow back to the GSEs and they will have already given away the amount of capital they should have kept in the equity position (the set up pre-conservitorship) but since these guys are all self serving frauds that were put in by all the people trying to cover this up and give the market to the banks, they go along with it because the need to get paid too. And if they're willing to strong arm the BoD in 2008 into essentially a mob loan, what's to stop them from pressuring their current mgmt (who was replaced by the frauds) to do whatever they want. Which will further work to their ends of blaming the GSEs for privatized losses in the future when no one buys the CRTs in a downturn thus giving the gov't (but really the banks) ever more ammo to claim that the GSEs are a failed biz model or whatever horseshit they're going to say. And most people, including the politicians won't know it or won't admit they know it because they're getting paid too. So yeah they're a scam and the people buying it won't say it becuase they know they're getting paid and the people selling it want the GSEs to fail long term so they're pushing it hard. And no one anywhere is scrutinizing it because all the 'research' on it is coming from where? oh right the banks selling them. So la la la the fraud continues. Have a nice day.

Coincidence? https://howardonmortgagefinance.com/2018/03/21/the-state-of-the-debate/comment-page-1/#comment-6336

Thoughts?

No one wants to say the banks have captured the congress but they have.

Yeah CRTs appear to me very close to being pure financial obfuscation to drain the GSEs of what would otherwise be equity capital buffers and also are counter-cyclical and therefore will be terrible in a recession as pointed out by both Tim Howard https://howardonmortgagefinance.com/2017/03/20/risk-transfers-in-the-real-world/ & Landon Parsons (Moelis) https://www.americanbanker.com/opinion/risk-transfer-alone-is-not-a-viable-solution-for-gses & Josh Rosner (via Twitter and I'm sure elsewhere) The real question is, if the FHFA knows this, and they should - what is their motivation to continue these programs - why not just keep the capital since it's not properly priced given how, when you dig in, you can see that the payment periods are much shorter than the life of the bond it's supposedly protecting against - the Mezz tranche typically has a principal window that is projected to start in 36 months. So it is very, very obvious what is going to happen there. (and I'm not sure, but I'm willing to bet that most defaults don't happen within the first 36 months). So unless you know what you're looking at, you'd never know that they're doing this... so the question is why? IF the FHFA is supposedly operating with the shareholders (taxpayers or orig equity holder(EG everyone on this board probably)) and the market experts are telling them they are structurally flawed yet they continue down the same path? Well... that seems suspicious to me. I'm no structured finance expert (...), but that tells me there are motives for issuing these products that aren't immediately apparent and are not as advertised.

had the same thought

lol there are people here who actually think the wall is a good idea? amazing. The wall is a high ROE project. The illegals are costing the country a few billion dollars a year for the social benefits, in addition to crimes they bring in. Thought you didn’t get any benefits if you’re illegal? As to crime ... when has a wall ever stopped that? lets not go off topic on that. I noticed for most political views, either people believe that from the start or never. Spending countless hours debating never changes a person’s political view. Sorry I brought it up.. let's look at this instead https://assets.pershingsquareholdings.com/media/2018/03/26000442/2017-Annual-Report.pdf

lol there are people here who actually think the wall is a good idea? amazing.

Presumably if they were private and actually allowed to pay down the sr prefs & allocate their own capital, they would have also have done a capital raise whereby existing investors would be more than happy to pay down the 10% yielding senior debt in exchange for some dilution Agree. It's also impossible to say, if they hadn't been forced into gov't control, essentially by Goldman, that their management could have used their expertise to invest in MBS when AAAs were trading at penny's on the dollar in 2008, rather than paying the banks par for their PLMBS garbage and thereby bailing out the banks ANOTHER way. What a world.

Jesus Christ https://howardonmortgagefinance.com/2018/03/21/the-state-of-the-debate/#comment-6269

So I'm not a legal expert, and I know courts have made time based rulings in the past, but do they know they're not supposed to muck up the ownership structure like that? It's not supposed to matter when someone purchased the stock, all the rights transfer at all times. That's a pretty fundamental underpinning of the stock market, at least that's the general assumption in the broader market place. When they start down that path, it gets extremely complex very quickly.

tim howard has a comment up to his last post from his book quoting kudlow as being virulently anti-congressional charter for GSEs...wanted them to become pure private companies. but i do believe that given his free market capitalism bent, he would want GSE shareholders to get back to square given the 10% moment has been reached. We finally got a 10% on this mob loan we gave you that you can't ever repay. We're totally going to treat you fairly going forward from here even though we don't have to and the judges all agree that we don't have to....pardon me for not giving any thought about the 10% moment... how about instead, we get a judge that says the entire c-ship was a fraud, which it was, based on the discovery documents.

Yes but to what do we all attribute the reasoning that they're all lying in tandem here to be?

If you missed this - even if you didn't - it's time to revisit http://www.fidererongses.com/params/post/1120535/perry-v-mnuchin-a-case-study-in-disingenuity

Jesus H Christ https://howardonmortgagefinance.com/2018/02/05/waiting-for-mr-corker/comment-page-1/#comment-6149

I'd love to hear this board's thoughts on the media coverage of this topic.

He doesn't - he's what people call an access journalist. Meaning he lies for money. There is no incentive for any of these journalists to go against the grain. If you watch Cohodes at Grant's this is his main point about why its so hard to short sell. That these journalists are all told not to discuss certian things that may upset their advertisers which is why CNBC et all are basically fluff and nonsense. Look what happens when people say things they don't want to be said: https://www.cnbc.com/video/2017/07/24/freddie-mac-going-anti-home-owner-by-investing-in-rental-property-rafferty-capitals-dick-bove.html This trickles down thru all media. I would turn your attention to what happened to Trey Garrison at Housing Wire after he wrote this: https://www.housingwire.com/blogs/1-rewired/post/34280-the-three-card-monte-accounting-of-fannie-freddie-conservatorship Trey 'changed jobs' the following November. hmm

https://howardonmortgagefinance.com/2018/02/05/waiting-for-mr-corker/comment-page-1/#comment-6099 Howard basically saying that the CRT deals are giveaways to their buyers and the FED is basically using it's research function to promote securities that don't do anything for the GSEs but do enrich their buyers. Such a farce.