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FNMA and FMCC preferreds. In search of the elusive 10 bagger.


twacowfca

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There were 33 arguments in April; so far we've had 18 decisions.

 

More than half done with the April arguments.  GSE case is likely much more complicated than many others, but it's good to see they are working through April cases at a decent clip... better than 3 or 4 from April being completed.  GSE case likely will be an outlier and have a longer timeframe than most, but that's not such a bad thing as far as I'm concerned.  The Captain Kirk side of me wants my emotions to be catered to with a quick decision, but the Spock side of me is comfortable with a lengthy decision process (especially given what Hume has said on the matter).  Plus, the longer it takes the more of my shares gain long-term tax status which will save me a pretty penny on any gains.

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There were 33 arguments in April; so far we've had 18 decisions.

 

More than half done with the April arguments.  GSE case is likely much more complicated than many others, but it's good to see they are working through April cases at a decent clip... better than 3 or 4 from April being completed.  GSE case likely will be an outlier and have a longer timeframe than most, but that's not such a bad thing as far as I'm concerned.  The Captain Kirk side of me wants my emotions to be catered to with a quick decision, but the Spock side of me is comfortable with a lengthy decision process (especially given what Hume has said on the matter).  Plus, the longer it takes the more of my shares gain long-term tax status which will save me a pretty penny on any gains.

 

After 3 years, I can safely say that all of my shares are long term :D

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Besides the issues with the profit sweep and the conversatorship - how good  would these business be without the government backing them up? What would their margins be and how much capital would they need to hold to run their business and insure millions of homes and assume the interest rate risk for millions for 30 year mortgages?

 

How would they fare if the government would compete with them by founding a new GSE backed with a government guarantee?

 

Yes it is. The main capitalization is the government guarantee.

 

I am no expert on this matter, but I think the preferred will not work out. I don't understand the legal issues very well, but my 10000 foot high perspective goes like that:

 

1) You are suing the US government on technicalities. Fannie and Freddie were broke many times at the time they were seized. now, they are profitable, but possibly because they have access to cheap capital, due the government guarantee. The lawsuits will be endless, because the government will not easily accept a loss.

 

2) If the lawsuits do work out and Fannie/Freddie do become private again, they need to raise a lot of capital. More expensive mortgages would be a huge political issue and not likely to happen. The government  will compete with them, by opening up a government sponsored institution doing the same thing, capitalized with $1 US, and a guarantee by he US government. Good Luck competing with that.

 

 

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Besides the issues with the profit sweep and the conversatorship - how good  would these business be without the government backing them up? What would their margins be and how much capital would they need to hold to run their business and insure millions of homes and assume the interest rate risk for millions for 30 year mortgages?

 

How would they fare if the government would compete with them by founding a new GSE backed with a government guarantee?

 

Yes it is. The main capitalization is the government guarantee.

 

I am no expert on this matter, but I think the preferred will notwork out. I don't understand the legal issues very well, but my 10000 foot high perspective goes like that:

 

1) You are suing the US government on technicalities. Fannie and Freddie were broke many times at the time they were seized. now, they are profitable, but possibly because they have access to cheap capital, due the government guarantee. The lawsuits will be endless, because the government will not easily accept a loss.

 

2) If the lawsuits do work out and Fannie/Freddie do become private again, they need to raise a lot of capital. More expensive mortgages would be a huge political issue and not likely to happen. The government  will compete with them, by opening up a government sponsored institution doing the same thing, capitalized with $1 US, and a guarantee by he US government. Good Luck competing with that.

 

If you don't understand the legal issues then this entire investment should make no sense to you. Very specific actions are being challenged here nothing of which you summarized . This isn't an investment where a 2 bullet point summary and general understanding will suffice.

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Guest cherzeca

Judge Steele filed to amend Hindes' complaint in the Delaware District Court

 

added a claim for unjust enrichment (which amendment must be granted by court)

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Judge Steele filed to amend Hindes' complaint in the Delaware District Court

 

added a claim for unjust enrichment (which amendment must be granted by court)

 

Merkhet, cherzeca and others, I'm interested in reading your thoughts on the amended complaint.  Thank you in advance for any comments you make.

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Guest cherzeca

Judge Steele filed to amend Hindes' complaint in the Delaware District Court

 

added a claim for unjust enrichment (which amendment must be granted by court)

 

Merkhet, cherzeca and others, I'm interested in reading your thoughts on the amended complaint.  Thank you in advance for any comments you make.

 

having made representation to MDL panel that hindes/jacobs would delete overlapping claims, they were obliged to follow through.  the unjust enrichment claim they added is not duplicative with other Ps, and is an equitable remedy which can be granted even if court finds that fhfa is the govt. award is disgorgement of money inequitably obtained.

 

so not much going on, mostly housekeeping, but P's counsel showing that he probably took an equitable remedies course in law school

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via peter chapman

 

Messrs. Jacobs and Hindes' lawyers advised Judge Sleet today that FHFA and Fannie Mae:

 

    (a) object to the shareholder-plaintiffs' request to add the unjust enrichment claims to their complaint; and

 

    (b) won't consent to notifying shareholders about dismissal of Counts III through X from the original complaint by filing a Form 8-K with the Securities and Exchange Commission.

15-00708-0049.pdf

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Haven't read it yet, but looks pretty bad. See attached

 

Edit: I've read the opinion. It is pathetic. Just plain pathetic. Laziness in the worst form. A pure echoing of Lamberth's simplistic reasoning--zero nuance or attention to detail. I just can't imagine that the DC Circuit will be satisfied with this type of reasoning, but this definitely shakes me, since it just adds to the momentum of courts making stupid decisions.

Kentucky_Fried_Opinion.pdf

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Seems to quote Lamberths decision throughout it all. Still see it as a negative as well.

 

From the time when this judge took over the case to the time of this decision, that's pretty fast. Humes said the longer it took the better. This judge probably started writing this opinion as soon as she got the case assigned.

 

So if these cases rule against us, we will have standing in court of claims as taking, right?

 

I wonder what happened behind the scene. First the prior judge found he had a few shares, and quit. Then this happened right away. Is there still any law and order in this administration?

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Haven't read it yet, but looks pretty bad. See attached

 

Edit: I've read the opinion. It is pathetic. Just plain pathetic. Laziness in the worst form. A pure echoing of Lamberth's simplistic reasoning--zero nuance or attention to detail. I just can't imagine that the DC Circuit will be satisfied with this type of reasoning, but this definitely shakes me, since it just adds to the momentum of courts making stupid decisions.

 

Question for the lawyers in the room...

 

Will the Kentucky decision impact none, one, two or all three of the following cases:

 

-Sweeney/Fairholme

-Sleet/Delaware

-Appeals/Perry

 

Thanks for your input!

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In theory, no. This should not affect other cases. However, it makes it psychologically more difficult for the appeals judges to break from the herd.

 

I think the original plan was to file a bunch of lawsuits to see which one would stick, but the downside is that every time you lose one, the government lawyers will (shortly) petition the appeals court for judicial notice of that loss.

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Guest cherzeca

In theory, no. This should not affect other cases. However, it makes it psychologically more difficult for the appeals judges to break from the herd.

 

I think the original plan was to file a bunch of lawsuits to see which one would stick, but the downside is that every time you lose one, the government lawyers will (shortly) petition the appeals court for judicial notice of that loss.

 

perry appeals ct already has lamberth's opinion before them. if they are going to vacate and remand, it is because 2/3 disagree with lamberth. this just means they would disagree with caldwell too.  i dont know that appeals ct judges take too much lead from district court judges, tho they certainly take cognizance of other appeals circuits

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Agree with chereca and merkhet. I'm putting myself in the position of a law clerk/judge working on a case. If i'm at the district court level, and there are a number of other cases in different jurisdictions answering the question i have in front of me in the same way, I will probably lean towards adopting that same reasoning, even though I don't have to. I wouldn't do it if the decision didn't make sense and was flawed, but if I'm going to disagree with them, there's a higher bar, and I'm going to really have to deal with those cases--I can't just ignore them. That makes it a lot harder.

 

If i'm at the circuit court level, and I'm still going to take note of what district courts have said, even if they aren't in my circuit. But at that level, I do think that it's reasonable to infer that the time spent and the degree of briefing requested, as well as the intensity of questioning in oral arguments, means that they aren't just going to issue a thoughtless and overly simplistic me-too opinion. I have to believe that they won't just agree with Lamberth's interpretation--otherwise, why did they ask for briefing on 4623 when nobody had even brought it up? Why did they ask for supplemental briefing on jurisdictional issues. Now I do NOT agree that the longer the spend, the more likely we'll win or get a remand--you might just get a really super complicated decision that still rejects the appeal on jurisdictional grounds.

 

The potential impact of this latest KY opinion on the Circuit court is unknown, but the downside is that it influences them somewhat. And it's especially bad if it influences other district courts--as I've mentioned previously, judicial momentum is a real thing. Right now, I'm really hanging my hat on the Perry Court and hoping for a remand at the very least.

 

In theory, no. This should not affect other cases. However, it makes it psychologically more difficult for the appeals judges to break from the herd.

 

I think the original plan was to file a bunch of lawsuits to see which one would stick, but the downside is that every time you lose one, the government lawyers will (shortly) petition the appeals court for judicial notice of that loss.

 

perry appeals ct already has lamberth's opinion before them. if they are going to vacate and remand, it is because 2/3 disagree with lamberth. this just means they would disagree with caldwell too.  i dont know that appeals ct judges take too much lead from district court judges, tho they certainly take cognizance of other appeals circuits

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