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

[DocSnowball]

I'm wondering if Mnuchin reverses NWS now he loses a big negotiating chip w litigators down the line - so won't do so unilaterally rather part of a final settlement

[orthopa]

One scenario for zero is if nationalized. Others?

 

If the zombie status remains as it is right now, ithr common and preferred are zeros too, it just will take a long time until all hope isn't gone and the stock prices adjust accordingly.

 

And its been discussed multiple times over the "zombie status" cannot persist.

[orthopa]

Paulson's comment that this investment has always been on mnuchin is not surprising. My view is the same.

 

General question to everyone on the thread. I think we know mnuchins stance on FnF and what he would like to see. Is anyone aware of any innuendo or statements that are discrediting to shareholders?

 

..And secondly for the lawyers. The Sweeney case appears that it could be potentially resolved or still on going on appeal long after FnF reform may be finished or take place. What happens in a situation where FnF are reformed, private and common get zero but Sweeney case ultimately decided positive for shareholders months after?

[Sunrider]

Haha - clearly I should've looked more closely! Duh!  ;D

 

new SA article by rule of law guy:  https://seekingalpha.com/article/4058606-fannie-freddie-litigation-thesis-remains-viable-perry?app=1&auth_param=16s4kh:1cdlfbu:337ae6bdd0f8c73b14c49bff34db4990&uprof=44&dr=1

 

Chris - do you agree with this fellow's legal analysis?

Thanks.

 

My hunch is they have the exact same opinion :)

[Spekulatius]

One scenario for zero is if nationalized. Others?

 

If the zombie status remains as it is right now, ithr common and preferred are zeros too, it just will take a long time until all hope isn't gone and the stock prices adjust accordingly.

 

And its been discussed multiple times over the "zombie status" cannot persist.

 

I beg to differ. Whatever can exist for 9 years can exist for 90 years. I have never heard a convincing argument why not. I agree that it those entities probably will not remain in the current state, but I think they could, especially since the status quo works really well for the government right now.

[Jurgis]

One scenario for zero is if nationalized. Others?

 

If the zombie status remains as it is right now, ithr common and preferred are zeros too, it just will take a long time until all hope isn't gone and the stock prices adjust accordingly.

 

And its been discussed multiple times over the "zombie status" cannot persist.

 

I beg to differ. Whatever can exist for 9 years can exist for 90 years. I have never heard a convincing argument why not. I agree that it those entities probably will not remain in the current state, but I think they could, especially since the status quo works really well for the government right now.

 

I think the argument against zombie state persisting is that GSEs run out of capital buffer in 2018 and need capital injection then or something similar.

 

What if govt does the capital injection but continues the same state with a higher ownership of prefs/warrants/whatever?

Maybe this is prohibited. Resident experts will tell you.  8)

[Desert_Rat]

I'd think the greatest possible scenario for it becoming a zero is this country becoming a political state in which all private possessions are turned over to the govt, or a variation of. Otherwise, no zero.

 

[Desert_Rat]

One scenario for zero is if nationalized. Others?

 

If the zombie status remains as it is right now, ithr common and preferred are zeros too, it just will take a long time until all hope isn't gone and the stock prices adjust accordingly.

 

And its been discussed multiple times over the "zombie status" cannot persist.

 

I beg to differ. Whatever can exist for 9 years can exist for 90 years. I have never heard a convincing argument why not. I agree that it those entities probably will not remain in the current state, but I think they could, especially since the status quo works really well for the government right now.

 

I think the argument against zombie state persisting is that GSEs run out of capital buffer in 2018 and need capital injection then or something similar.

 

What if govt does the capital injection but continues the same state with a higher ownership of prefs/warrants/whatever?

Maybe this is prohibited. Resident experts will tell you.  8)

 

and if they need a capital buffer, which they absolutely will if they're forever disallowed to save for their own buffer, that cash comes straight from govt. FnF, once a cash cow, becomes a liability. Sure, more preferreds would be issued but what point are they if they essentially have a zero int rate attached to them?

[orthopa]

One scenario for zero is if nationalized. Others?

 

If the zombie status remains as it is right now, ithr common and preferred are zeros too, it just will take a long time until all hope isn't gone and the stock prices adjust accordingly.

 

And its been discussed multiple times over the "zombie status" cannot persist.

 

I beg to differ. Whatever can exist for 9 years can exist for 90 years. I have never heard a convincing argument why not. I agree that it those entities probably will not remain in the current state, but I think they could, especially since the status quo works really well for the government right now.

 

I think the argument against zombie state persisting is that GSEs run out of capital buffer in 2018 and need capital injection then or something similar.

 

What if govt does the capital injection but continues the same state with a higher ownership of prefs/warrants/whatever?

Maybe this is prohibited. Resident experts will tell you.  8)

 

and if they need a capital buffer, which they absolutely will if they're forever disallowed to save for their own buffer, that cash comes straight from govt. FnF, once a cash cow, becomes a liability. Sure, more preferreds would be issued but what point are they if they essentially have a zero int rate attached to them?

 

And at what point does FnF go on the govt balance sheet? Not as simple as just taking money from the companies in perpetuity.

[hardincap]

Joe light reporting that Fhfa on record said sweep will go through

[muscleman]

Joe light reporting that Fhfa on record said sweep will go through

 

 

Yeah this is disappointing. And the disgusted Corker is asking Watt not to do anything about it.

[orthopa]

Joe light reporting that Fhfa on record said sweep will go through

 

 

Yeah this is disappointing. And the disgusted Corker is asking Watt not to do anything about it.

 

Ill tell you what I dont think this is bearish at all. It sounds like Corker et al and congress are worried that Trump, Mnuchin, Watt are going to act unilaterally. They also make it clear they cannot stop the aforementioned from acting unilaterally suggesting congress should decide.

 

Corker also says its possible congress could recapitalize significantly restructured enterprises.

 

Why write the letter if you are not threatened?

 

Seems like the pendulum is swinging away from these guys.

 

 

[TonyG]

as much as i don't want the sweep to go through, it makes sense for it to go through now. This way mnuchin in a few months can come out and say"after a long time researching this, there is no alternative to fannie and freddie". which than makes sense to settle lawsuits, and recap them.

[Guest cherzeca]

even if the nws was retroactively invalidated, fnma would still owe treasury about $4B after 3/31 payment.  so this payment is something that would have to be made either now or later if reinstating the original deal is to be part of the reform objective

[investorG]

stopping the sweep could've changed the tone of the forward discussion in regards to some real action rather than words or hope.

 

i'm obviously looking at this from the outside without any knowledge of future strategies but it's disappointing to me that they don't have an urgency to right a major wrong.  the table was set for them with a simple sweep stoppage + reiteration of bipartisan reform and they punted.

 

I wish everyone good luck --- looks like we'll need some.

[orthopa]

While not stopping the sweep short term is disappointing that isn't the end game we are looking for which will ultimately be reform. Would have been a great sign from Mnuchin none the less.

 

Congress is clearly worried something is brewing at treasury/FhFA. Contrast the sentiment compared to even 6 months ago. Not long ago Corker went on CNBC saying he would short FnF and now he is asking them to not stop the sweep and act unilaterally.

 

Warner also spoke out against Mnuchin at his confirmation hearing as he did not trust him to not act unilaterally on housing reform. Corker, Warner et al have lost the upper hand. We just need Mnuchin/Watt to do what we all want them to do, until then we sit and wait.

 

Corker also writes "Perhaps congress determines it is appropriate to recapitalize significant restructured enterprises as part of a comprehensive approach to housing finance reform."

 

Oh really Mr Corker? Now congress may recapitalize some version of FnF? Huh?

[orthopa]

There was an inside mortgage finance article that suggests FHFA may switch to a annual instead of quarterly payment to allow some capital buffer again swing in interest rates.

[Desert_Rat]

While not stopping the sweep short term is disappointing that isn't the end game we are looking for which will ultimately be reform. Would have been a great sign from Mnuchin none the less.

 

Congress is clearly worried something is brewing at treasury/FhFA. Contrast the sentiment compared to even 6 months ago. Not long ago Corker went on CNBC saying he would short FnF and now he is asking them to not stop the sweep and act unilaterally.

 

Warner also spoke out against Mnuchin at his confirmation hearing as he did not trust him to not act unilaterally on housing reform. Corker, Warner et al have lost the upper hand. We just need Mnuchin/Watt to do what we all want them to do, until then we sit and wait.

 

Corker also writes "Perhaps congress determines it is appropriate to recapitalize significant restructured enterprises as part of a comprehensive approach to housing finance reform."

 

Oh really Mr Corker? Now congress may recapitalize some version of FnF? Huh?

 

Doing so would have cost political capital. There was really no reason to suspend the payment before tax reform determines an immediate issue, and of priority right now is the budget and debt ceiling. To have come out of left field and forced conversation on housing reform now would have been counter-productive I think.

 

Besides, Corker has accomplished just as much with his apparent desperation. The market seems bored but this has been a good morning,  imo.

[beaufort]

The payment going through is disappointing. 

I am looking forward to document production in mid April from the order by Judge Sweeney.  Let's see why tens of thousands of documents needed to be privileged. 

[Desert_Rat]

"Mortgage Industry Expects FHFA Chief Watt to Change the GSE Dividend; Five Senators Warn Against It"

 

Is this fake news?

paywall: http://www.insidemortgagefinance.com/imfnews/1_1073/daily/five-senators-tell-fhfa-not-to-change-gse-dividends-1000040730-1.html

[waynepolsonAtoZ]

Fake News.

 

FHFA Director Watt has said he would defer to Tsy on changing the SPSPAs. He would like to have FnF recap however.

[blainehodder]

While not stopping the sweep short term is disappointing that isn't the end game we are looking for which will ultimately be reform. Would have been a great sign from Mnuchin none the less.

 

Congress is clearly worried something is brewing at treasury/FhFA. Contrast the sentiment compared to even 6 months ago. Not long ago Corker went on CNBC saying he would short FnF and now he is asking them to not stop the sweep and act unilaterally.

 

Warner also spoke out against Mnuchin at his confirmation hearing as he did not trust him to not act unilaterally on housing reform. Corker, Warner et al have lost the upper hand. We just need Mnuchin/Watt to do what we all want them to do, until then we sit and wait.

 

Corker also writes "Perhaps congress determines it is appropriate to recapitalize significant restructured enterprises as part of a comprehensive approach to housing finance reform."

 

Oh really Mr Corker? Now congress may recapitalize some version of FnF? Huh?

 

Doing so would have cost political capital. There was really no reason to suspend the payment before tax reform determines an immediate issue, and of priority right now is the budget and debt ceiling. To have come out of left field and forced conversation on housing reform now would have been counter-productive I think.

 

Besides, Corker has accomplished just as much with his apparent desperation. The market seems bored but this has been a good morning,  imo.

 

There is of course the option to change to an annual div instead of quarterly. Gives the appearance of non suspension while building some cushion and buying time.

[Desert_Rat]

I can't see that happening though. Why go through steps to change parts of the NWS when the entire amendment has to be addressed?

[blainehodder]

I can't see that happening though. Why go through steps to change parts of the NWS when the entire amendment has to be addressed?

 

To buy time. It is an easy band-aid solution that pushes the need to address the whole debacle until after tax reform bills.

[asterisk]

I apologize if this has been asked, but is anyone aware of the time the NWS is posted online?