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

[Midas79]

Calabria is set to speak publicly twice in the next couple of weeks, once on May 14 at a talk moderated by Bethany McLean, and once on May 20 at the MBA conference. Calabria's track record suggests that these are just two more opportunities to stick his foot in his mouth. For once, I want the FHFA director to just give non-answers so as not to make things more complicated. There is little he can do without knowing Treasury's plan anyway.

[Guest cherzeca]

Calabria is set to speak publicly twice in the next couple of weeks, once on May 14 at a talk moderated by Bethany McLean, and once on May 20 at the MBA conference. Calabria's track record suggests that these are just two more opportunities to stick his foot in his mouth. For once, I want the FHFA director to just give non-answers so as not to make things more complicated. There is little he can do without knowing Treasury's plan anyway.

 

the frigging last thing you want before a large capital raise is to have a decision maker spouting off.  I will say however that Bethany will be great as a questioner. 

[DRValue]

Calabria is set to speak publicly twice in the next couple of weeks, once on May 14 at a talk moderated by Bethany McLean, and once on May 20 at the MBA conference. Calabria's track record suggests that these are just two more opportunities to stick his foot in his mouth. For once, I want the FHFA director to just give non-answers so as not to make things more complicated. There is little he can do without knowing Treasury's plan anyway.

 

the frigging last thing you want before a large capital raise is to have a decision maker spouting off.  I will say however that Bethany will be great as a questioner.

 

Bethany is fantastic.

[DRValue]

Thinking about another proposal for instant gse recap...

 

If the spsa isn't deemed repaid as per Cowen note and we ignore lawsuits.

 

One option might be for the treasury to keep the spsa 10pct moment dividends and transfer the remaining 119b principal (for Fannie Mae) to Fannie Mae then convert the spsa to common.

 

Interestingly that would leave them over capitalised by $32b (119-87) which could either be used to redeem the juniors and/or back pay dividends which I personally think they are owed. Imo this would wipe the slate clean on potential lawsuits and be politically acceptable.

 

There would also be extra warrant money.

 

What this does to the share count for common I don't know...

 

[rros]

Calabria is set to speak publicly twice in the next couple of weeks, once on May 14 at a talk moderated by Bethany McLean, and once on May 20 at the MBA conference. Calabria's track record suggests that these are just two more opportunities to stick his foot in his mouth. For once, I want the FHFA director to just give non-answers so as not to make things more complicated. There is little he can do without knowing Treasury's plan anyway.

 

the frigging last thing you want before a large capital raise is to have a decision maker spouting off.  I will say however that Bethany will be great as a questioner.

 

Bethany is fantastic.

It's not clear she is pro-shareholders.

[SnarkyPuppy]

Calabria is set to speak publicly twice in the next couple of weeks, once on May 14 at a talk moderated by Bethany McLean, and once on May 20 at the MBA conference. Calabria's track record suggests that these are just two more opportunities to stick his foot in his mouth. For once, I want the FHFA director to just give non-answers so as not to make things more complicated. There is little he can do without knowing Treasury's plan anyway.

 

the frigging last thing you want before a large capital raise is to have a decision maker spouting off.  I will say however that Bethany will be great as a questioner.

 

Bethany is fantastic.

It's not clear she is pro-shareholders.

 

https://washingtonmonthly.com/magazine/maraprmay-2016/mend-dont-end-fannie-and-freddie/

[Guest cherzeca]

Calabria is set to speak publicly twice in the next couple of weeks, once on May 14 at a talk moderated by Bethany McLean, and once on May 20 at the MBA conference. Calabria's track record suggests that these are just two more opportunities to stick his foot in his mouth. For once, I want the FHFA director to just give non-answers so as not to make things more complicated. There is little he can do without knowing Treasury's plan anyway.

 

the frigging last thing you want before a large capital raise is to have a decision maker spouting off.  I will say however that Bethany will be great as a questioner.

 

Bethany is fantastic.

It's not clear she is pro-shareholders.

 

https://washingtonmonthly.com/magazine/maraprmay-2016/mend-dont-end-fannie-and-freddie/

 

thanks for post snark.  I hadn't seen this before.  Bethany is smart as a whip

[Eye4Valu]

I read that Buffett/Munger got a question about Fannie/Freddie yesterday. Anybody see or hear it to provide some context?

[rros]

Calabria is set to speak publicly twice in the next couple of weeks, once on May 14 at a talk moderated by Bethany McLean, and once on May 20 at the MBA conference. Calabria's track record suggests that these are just two more opportunities to stick his foot in his mouth. For once, I want the FHFA director to just give non-answers so as not to make things more complicated. There is little he can do without knowing Treasury's plan anyway.

 

the frigging last thing you want before a large capital raise is to have a decision maker spouting off.  I will say however that Bethany will be great as a questioner.

 

Bethany is fantastic.

It's not clear she is pro-shareholders.

 

https://washingtonmonthly.com/magazine/maraprmay-2016/mend-dont-end-fannie-and-freddie/

Thanks.

I stand by what I said. While she is clearly pro-Gses in a twisted type of way, she is not being straightforwardly pro-shareholders. Simply trying to tell all sides of the story in the most possible unbiased way (like in all of her interviews) does nothing to support the rights of shareholders. Specially, with a 'Bloomberg' type of remark like this:

 

...and, curiously, a few hedge fund billionaires who bought Fannie and Freddie stock low and stand to make a killing if the companies are revived...

 

 

[SnarkyPuppy]

Calabria is set to speak publicly twice in the next couple of weeks, once on May 14 at a talk moderated by Bethany McLean, and once on May 20 at the MBA conference. Calabria's track record suggests that these are just two more opportunities to stick his foot in his mouth. For once, I want the FHFA director to just give non-answers so as not to make things more complicated. There is little he can do without knowing Treasury's plan anyway.

 

the frigging last thing you want before a large capital raise is to have a decision maker spouting off.  I will say however that Bethany will be great as a questioner.

 

Bethany is fantastic.

It's not clear she is pro-shareholders.

 

https://washingtonmonthly.com/magazine/maraprmay-2016/mend-dont-end-fannie-and-freddie/

Thanks.

I stand by what I said. While she is clearly pro-Gses in a twisted type of way, she is not being straightforwardly pro-shareholders. Simply trying to tell all sides of the story in the most possible unbiased way (like in all of her interviews) does nothing to support the rights of shareholders. Specially, with a 'Bloomberg' type of remark like this:

 

...and, curiously, a few hedge fund billionaires who bought Fannie and Freddie stock low and stand to make a killing if the companies are revived...

 

There is, however, a fourth option: fix the flaws in Fannie and Freddie and let them operate, as they did—effectively—for more than half a century, as the main public-private guarantors of the thirty-year mortgage. This idea might sound sensible to most Americans. But in Washington it is considered, if not completely insane, then at the very least a political nonstarter. Yet it does have some backers, including certain reform-minded financial analysts, think tank scholars, civil rights groups, lobbyists for small banks, and, curiously, a few hedge fund billionaires who bought Fannie and Freddie stock low and stand to make a killing if the companies are revived. While this odd assortment of players isn’t getting much of a hearing right now, their idea has one advantage over all the others: it would actually work.

[Guest cherzeca]

I read that Buffett/Munger got a question about Fannie/Freddie yesterday. Anybody see or hear it to provide some context?

 

https://finance.yahoo.com/video/buffett-affordable-housing-lending-192948580.html?soc_src=community&soc_trk=tw

 

[rros]

Calabria is set to speak publicly twice in the next couple of weeks, once on May 14 at a talk moderated by Bethany McLean, and once on May 20 at the MBA conference. Calabria's track record suggests that these are just two more opportunities to stick his foot in his mouth. For once, I want the FHFA director to just give non-answers so as not to make things more complicated. There is little he can do without knowing Treasury's plan anyway.

 

the frigging last thing you want before a large capital raise is to have a decision maker spouting off.  I will say however that Bethany will be great as a questioner.

 

Bethany is fantastic.

It's not clear she is pro-shareholders.

 

https://washingtonmonthly.com/magazine/maraprmay-2016/mend-dont-end-fannie-and-freddie/

Thanks.

I stand by what I said. While she is clearly pro-Gses in a twisted type of way, she is not being straightforwardly pro-shareholders. Simply trying to tell all sides of the story in the most possible unbiased way (like in all of her interviews) does nothing to support the rights of shareholders. Specially, with a 'Bloomberg' type of remark like this:

 

...and, curiously, a few hedge fund billionaires who bought Fannie and Freddie stock low and stand to make a killing if the companies are revived...

 

There is, however, a fourth option: fix the flaws in Fannie and Freddie and let them operate, as they did—effectively—for more than half a century, as the main public-private guarantors of the thirty-year mortgage. This idea might sound sensible to most Americans. But in Washington it is considered, if not completely insane, then at the very least a political nonstarter. Yet it does have some backers, including certain reform-minded financial analysts, think tank scholars, civil rights groups, lobbyists for small banks, and, curiously, a few hedge fund billionaires who bought Fannie and Freddie stock low and stand to make a killing if the companies are revived. While this odd assortment of players isn’t getting much of a hearing right now, their idea has one advantage over all the others: it would actually work.

Alright. You win :)

[Ahab]

I'm a huge fan of plans that actually work that happen to make me money.

In all seriousness, McLean is a good author and her book on the GSEs, Shaky Ground, is an enjoyable, illuminative, and quick read.

[rros]

I'm a huge fan of plans that actually work that happen to make me money.

In all seriousness, McLean is a good author and her book on the GSEs, Shaky Ground, is an enjoyable, illuminative, and quick read.

I only care about the expropriation of private property.

 

Add shareholders' rights, if you'd like. The rest, personally, no opinions. So I am laser-focused on one thing and whatever the lady writes... well, it may be an entertaining read.

 

I have recently seen the dark side of Fannie and Freddie for the 1st time since I hold this investment.

 

Been President of our Assn. numerous times. About 2 months ago, a unit in the blgd goes up for sale. We look at the background information for the buyer and notice he is a low income individual with the possibility of having issues meeting the current expenditures we are going through ( assessments). In the interview all goes fine. I take the opportunity to ask him how he feels about meeting our needs. He says he is ok.

 

A week later, we receive a letter from the City requesting we sign a document accepting the City's second mortgage. Never seen that before. When I finally understood the transaction. In order to buy the unit the buyer was borrowing twice to exceed purchasing price by about 10%. In order words, from these 2 lenders, he was leveraging 110%. Obviously, a zero-down purchase. We modify the City's document with our attorney to acknowledge our placement on a lien to avoid being the last in line.

 

Another week goes by and we receive a document by the Title company asking us to sign an affidavit of sufficient funds for work that was pending by a contractor. In reality, work got cancelled and the matter was being resolved separately. Again, we adjusted the document and signed it.

 

Then, it was all about insurances.

Mortgage lenders request us to comply with Freddie Mac requirements for all our coverage. We fight back. After weeks, we agree to raise premiums for crime adding $3 per unit of monthly maintenance forever. Then, flood. The Florida Condominium Act's only mention about flood is that -while not mandatory- it should be *adequate* if obtained. FEMA, on the other hand, overrides this and makes it mandatory for certain locations on their "flood map". We are on a FEMA-designated flood zone so we have always carried flood. But FEMA never changed the concept of *adequacy* accepting the fact some properties could remain under-insured. Solution: condo unit owners to buy additional coverage on a personal basis (personal flood).

 

Think about this for a second.

 

Half of the owners here have been cash buyers. Another 3rd, used non-fannie/freddie financing money over the years. And the few owners who had issues have paid the difference themselves. Now, a low income borrower comes along -whose loans are hotter than a hot potato and every one of his lenders is trying to run away from them damping the credit risk to Freddie Mac as fast as they can- which triggers an economic shock to our Association resulting in an increase of $25 (22 flood +3 crime) a month of maintenance per unit, for life.

 

I could not even find solace in our attorney so, much to my chagrin, flood coverage was raised.

 

What this amount to.

 

We like to think of the social mission of Fannie and Freddie. But there is a large apparatus at work that obfuscates who gets to pay the final bill. Because this was a low income borrower, every actor in the play felt compelled to go along with the transaction. The actors that mattered were quick to disappear through the back door. In order to do so, all they needed was our Association to pick up the slack. While this was not a case of "may or may not", ours involved the City's Attorney's office and we know how lawyers can find ways to interpret things in the darkest manner. So we gave up. Strangely, a month before all this happened, another transaction went through swiftly. That buyer -a financially stable person- had similar issues at the start but asked Regions how to forgo the requirements: 30% down and an 8% mortgage. That buyer told Regions to go packing and looked for an alternative source of money. He got all requirements waived in exchange for a 25% downpayment (and current market mortgage rates). Transaction closed promptly with no issues, nothing to be signed.

 

Wrap-up. In the painful (for us) transaction, only the seller got the win-win. He made coin while not having to participate in the raise of insurances (he leaves). Mortgage lenders unloaded the risk. Freddie Mac makes everybody else pay for the risky borrower. Us, residents, got the lose-lose. We now pay $25 more each of monthly expenses, for life. Just because of one single real estate transaction. And, we have now the risk of an owner who may not meet our needs. Just 3 years ago we had to place a lien on an unit when an owner with a similar profile stopped paying maintenance for 6 months. We forced a sale of the unit and collected the debt.

 

So again. Careful what you wish for. The same socialist principles that may be feeding through the Fannie/Freddie ecosystem may have a close cousin in the NWS. I am not too smart to have an opinion on how housing finance should work or if there should be a Fannie or a Freddie. This is why my only concern is expropriation of private profits and our rights as shareholders.

[Eye4Valu]

I read that Buffett/Munger got a question about Fannie/Freddie yesterday. Anybody see or hear it to provide some context?

 

https://finance.yahoo.com/video/buffett-affordable-housing-lending-192948580.html?soc_src=community&soc_trk=tw

 

Thanks!

[DRValue]

CFPB constitutional again!  :)

 

https://news.bloomberglaw.com/us-law-week/cfpb-structure-is-constitutional-ninth-circuit-says

 

Summoning Chris...

[Guest cherzeca]

CFPB constitutional again!  :)

 

https://news.bloomberglaw.com/us-law-week/cfpb-structure-is-constitutional-ninth-circuit-says

 

Summoning Chris...

 

wasn't following this case.  5th circuit in Collins won't be affected by what 9th circuit says re CFPB.

 

the 5th cir also has a cfpb case, all American that has had oral argument.  seems to me they will decide collins first

[DRValue]

CFPB constitutional again!  :)

 

https://news.bloomberglaw.com/us-law-week/cfpb-structure-is-constitutional-ninth-circuit-says

 

Summoning Chris...

 

wasn't following this case.  5th circuit in Collins won't be affected by what 9th circuit says re CFPB.

 

the 5th cir also has a cfpb case, all American that has had oral argument.  seems to me they will decide collins first

 

Phew!

Always great to be able to rely on Chris.

 

I don't know why it's not affected but it doesn't matter as I trust the answer!  :)

[DRValue]

CFPB constitutional again!  :)

 

https://news.bloomberglaw.com/us-law-week/cfpb-structure-is-constitutional-ninth-circuit-says

 

Summoning Chris...

 

wasn't following this case.  5th circuit in Collins won't be affected by what 9th circuit says re CFPB.

 

the 5th cir also has a cfpb case, all American that has had oral argument.  seems to me they will decide collins first

 

Phew!

Always great to be able to rely on Chris.

 

I don't know why it's not affected but it doesn't matter as I trust the answer!  :)

 

Legal opinion for those interested.

 

http://cdn.ca9.uscourts.gov/datastore/opinions/2019/05/06/17-56324.pdf

[Guest cherzeca]

CFPB constitutional again!  :)

 

https://news.bloomberglaw.com/us-law-week/cfpb-structure-is-constitutional-ninth-circuit-says

 

Summoning Chris...

 

wasn't following this case.  5th circuit in Collins won't be affected by what 9th circuit says re CFPB.

 

the 5th cir also has a cfpb case, all American that has had oral argument.  seems to me they will decide collins first

 

Phew!

Always great to be able to rely on Chris.

 

I don't know why it's not affected but it doesn't matter as I trust the answer!  :)

 

first, I have been wrong on just about everything legal so far.  not that this will affect me.

 

second, each circuit is its own little fiefdom until SCOTUS decides.  while I think higginson and maybe a few others on 5th cir would very well be affected by 9th circuit reasoning, the majority of the 5th circuit judges have independent and constitutionally conservative streaks.

 

for an academic read on the administrative state (9th cir) v constitutionally conservative (5th circuit) views, see http://ndlawreview.org/wp-content/uploads/2019/01/7-Calabresi-Lawson.pdf.

[muscleman]

Added more today. Don’t worry about the 9th circuit ruling on CFPB. Check the charts on FNMAS. It says that ruling is unrelated.

[Guest cherzeca]

Added more today. Don’t worry about the 9th circuit ruling on CFPB. Check the charts on FNMAS. It says that ruling is unrelated.

 

$.13 away from 5 year high on fnmas. (is that good or bad TA-wise?)

[muscleman]

Added more today. Don’t worry about the 9th circuit ruling on CFPB. Check the charts on FNMAS. It says that ruling is unrelated.

 

$.13 away from 5 year high on fnmas. (is that good or bad TA-wise?)

 

 

The above statement alone is hard to say whether it is good or bad. We need more context. For example, if FNMAS makes a blow off move to a high of this level, I’d sell all of it. But for our current case, I am bullish because I just said I added more today. The most important thing to check is whether the smart guys are selling when the stock is at a new high. If they are not willing to sell, then it means this thing will soon go much higher. If they are selling, and likely bribing journalists to write bullish articles at the same time(example: March 2014) then it is a negative sign. Right now, I am not seeing a lot of bullish articles about it. I am seeing two clowns Carney and Gasparino bashing hard while the stock steadily moves up. That’s a bullish sign

[Guest cherzeca]

Added more today. Don’t worry about the 9th circuit ruling on CFPB. Check the charts on FNMAS. It says that ruling is unrelated.

 

$.13 away from 5 year high on fnmas. (is that good or bad TA-wise?)

 

 

The above statement alone is hard to say whether it is good or bad. We need more context. For example, if FNMAS makes a blow off move to a high of this level, I’d sell all of it. But for our current case, I am bullish because I just said I added more today. The most important thing to check is whether the smart guys are selling when the stock is at a new high. If they are not willing to sell, then it means this thing will soon go much higher. If they are selling, and likely bribing journalists to write bullish articles at the same time(example: March 2014) then it is a negative sign. Right now, I am not seeing a lot of bullish articles about it. I am seeing two clowns Carney and Gasparino bashing hard while the stock steadily moves up. That’s a bullish sign

 

very low volume in fnma/fnmas.  I see it melting up as more LIFOs warm to name, not big boys selling out.  many big boys have been in this since before 2012 so seems like they may be in it to win it

[investorG]

Calabria is set to speak publicly twice in the next couple of weeks, once on May 14 at a talk moderated by Bethany McLean, and once on May 20 at the MBA conference. Calabria's track record suggests that these are just two more opportunities to stick his foot in his mouth. For once, I want the FHFA director to just give non-answers so as not to make things more complicated. There is little he can do without knowing Treasury's plan anyway.

 

imo it's more likely than not that Calabria knows exactly what he's doing and that he's aware of the plan that otting referenced.  If a capital raise is coming (which is currently unclear), and you were a potential investor, what would you rather:  quasi-certainty that there won't be any competition or a low stock purchase price / higher pro forma % ownership relative to the current common/govt/jr pref holders.  I'd probably pick the latter.  So it might be a goal of his to not pump the common stock price.