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

[merkhet]

Hume's part of the case was based on breach of contract and breach of the implied covenant of good faith and fair dealing, which, and it seems like people periodically forget this, prevailed in the U.S. Court of Appeals for the D.C. Circuit. Why would he appeal the case to the Supreme Court? He won. They're getting ready to try the case back in the U.S. District Court for D.C.

 

We affirm the judgment of the district court that the institutional plaintiffs’ claims against the FHFA and Treasury alleging arbitrary and capricious conduct and conduct in excess of their statutory authority are barred by 12 U.S.C. § 4617(f).  We affirm the district court’s dismissal of their common-law claims because they were not properly appealed.  With respect to the class plaintiffs’ claims, we affirm the judgment of the district court on all claims except for the claims alleging breach of contract and breach of the implied covenant of good faith and fair dealing regarding liquidation preferences and the claim for breach of the implied covenant with respect to dividend rights, which claims we remand for further proceedings consistent with this opinion.

[Eye4Valu]

Don't forget about Sweeney and Court of Claims. It ain't over until it's over!

[Guest cherzeca]

fairholme's cert petition:  http://www.gselinks.com/Court_Filings/Fairholme/Fairholme_Cert_Petition.pdf

[DocSnowball]

fairholme's cert petition:  http://www.gselinks.com/Court_Filings/Fairholme/Fairholme_Cert_Petition.pdf

 

Thanks for sharing. The initial 41 pages summary was very interesting reading! It would be so great if the Court takes this up. What is the typical timeline between now and finding out if the Court will take this up?

[Guest cherzeca]

Do the defendants have to respond to the supreme court petition that was filed before the court decides to accept or reject it? I don't think so but thought I ask.

 

there is an allotted period for defendant brief and a plaintiff reply brief.  i think 45 days in total. 

[Eye4Valu]

My uncle is a partner in our firm and represented a client on a tax matter that was eventually granted cert. He made oral argument before scotus on the case. When he gets back in town I'll ask him his thoughts on the process and these petitions for writ. He is primarily a litigator, and is certainly not a stupid guy.

[investorG]

we're 75 days from jump start's scheduled expiration, among a lot of other interesting news.

 

yet I just purchased some preferreds @ 21% of par.

 

the joke's on someone --- either me or the steady sellers.

[DocSnowball]

I read that privatization is in the bill. What could be the ramifications for us?  I also read that Corker continues to play politics and now calling it as a  hoax. Do you think they will sell us out just to get his vote? I would get someone else to agree to vote and forget Corker.

 

Which bill? Is there a link to the bill itself?

[Luke 532]

Trump picks MBA’s Len Wolfson to serve as HUD assistant secretary

https://www.housingwire.com/articles/41621-trump-picks-mbas-len-wolfson-to-serve-as-hud-assistant-secretary?utm_source=dlvr.it&utm_medium=twitter&utm_campaign=housingwire

[Midas79]

I read that privatization is in the bill. What could be the ramifications for us?  I also read that Corker continues to play politics and now calling it as a  hoax. Do you think they will sell us out just to get his vote? I would get someone else to agree to vote and forget Corker.

 

Which bill? Is there a link to the bill itself?

 

I assume it is the Financial CHOICE Act of 2017 that passed the House.

 

https://www.congress.gov/bill/115th-congress/house-bill/10/text?r=1

 

This little gem is in there:

 

SEC. 352. Federal Housing Finance Agency.

 

Section 1312(b)(2) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4512) is amended by striking “for cause”.

 

allowing Trump to fire Watt at will if this bill becomes law. I searched "Fannie", "Freddie", "GSE" and found nothing. Then again, this bill passed the House in June so it is nothing new. I'm guessing that the Senate is debating it and that's why Corker is commenting.

 

But there is nothing in there about privatizing the GSEs. In the past Hensarling has talked about that, and I believe his version of privatization involves running Fannie and Freddie through receivership and eliminating them entirely. As things stand the full senior preferred liquidation preference is on FnF's balance sheet, so receivership would zero out all common and junior preferred shares.

[Midas79]

You can't have a company that has been profitable for last 4 years in receivership.

 

Sure you can, the same way they were put in conservatorship in the first place. It only takes a fudge factor of a few billion to turn the equity portion of the balance sheet negative. A small DTA write-down (anticipating "adverse effects of tax reform") at the direction of FHFA would do it.

 

As to your point about Watt's potential removal without cause, it isn't nearly the big deal you think it is. Mnuchin could have been refusing the NWS payments all along, and he really is removable by Trump at will.

[rros]

I think Mnuchin is refusing to exert pressure on Watt to release them and not just partially solve NWS issue. Partial removal of NWS means conservatorship in perpetuity. Think about it: Why would you make noise to get them out of conservatorship if they have capital and working fine?

 

You can't have a company that has been profitable for last 4 years in receivership.

 

Sure you can, the same way they were put in conservatorship in the first place. It only takes a fudge factor of a few billion to turn the equity portion of the balance sheet negative. A small DTA write-down (anticipating "adverse effects of tax reform") at the direction of FHFA would do it.

 

As to your point about Watt's potential removal without cause, it isn't nearly the big deal you think it is. Mnuchin could have been refusing the NWS payments all along, and he really is removable by Trump at will.

The conservatorship will not be in perpetuity. Trump will absolutely cash in on the warrants. When the ca-ching will be heard is another story. In the next few months, before his term is over in 2020 or in another 7 years if the unthinkable happens, he runs again and is re-elected. Your guess.

[Luke 532]

Watt scheduled to speak at MBA convention this afternoon.

[Luke 532]

Watt scheduled to speak at MBA convention this afternoon.

 

Prepared remarks...

https://www.fhfa.gov/Media/PublicAffairs/Pages/Prepared-Remarks-of-Melvin-L-Watt-Director-of-FHFA-at-Mortgage-Bankers-Association-Annual-Convention-and-Expo-2017.aspx?utm_medium=email&utm_source=govdelivery

[Guest cherzeca]

Watt scheduled to speak at MBA convention this afternoon.

 

Prepared remarks...

https://www.fhfa.gov/Media/PublicAffairs/Pages/Prepared-Remarks-of-Melvin-L-Watt-Director-of-FHFA-at-Mortgage-Bankers-Association-Annual-Convention-and-Expo-2017.aspx?utm_medium=email&utm_source=govdelivery

 

No news. Mostly BS

[Eye4Valu]

"Throughout my tenure as Director of the Federal Housing Finance Agency (FHFA), I hope it has not gone unnoticed that the things I have valued most (and have encouraged the FHFA staff to value) are transparency, communication, and collaboration.  In every issue and challenge we have tackled (and none of them have been easy), my view has always been that the best way forward has been through honest and open dialogue and through constructive collaboration."

 

Am I the only one who didn't notice any of that Mel?   

[waynepolsonAtoZ]

"That little gem is a diamond, big one, we need it, we must have it."

 

Just to state the obvious, if they get that enacted they will put another DeMarco in place, someone that truly hates FnF.

[Guest cherzeca]

https://twitter.com/realdonaldtrump/status/922798321739161600

[rros]

https://twitter.com/realdonaldtrump/status/922798321739161600

And...

http://www.tennessean.com/story/news/2017/10/05/u-s-rep-marsha-blackburn-launches-senate-bid-bob-corker-seat/708717001/

 

Didn't she have a bill to recap the companies or stop the nws (supported by IU)?

[Luke 532]

David Stevens is leaving MBA (not until next September though)

https://www.housingwire.com/articles/41654-shocker-mba-president-and-ceo-david-stevens-announces-retirement?utm_source=dlvr.it&utm_medium=twitter&utm_campaign=housingwire

[Luke 532]

Coming Soon: The Trump Administration’s ‘Principles’ on GSE Reform

https://www.insidemortgagefinance.com/imfnews/1_1220/daily/trump-treasury-gse-reform-plan-coming-soon-1000043388-1.html#Login

 

[investorG]

if the Sweeney case is settled, do the 1500 documents go away permanently or can one of the other peripheral cases access those?

 

after listening to the congressional hearings, and under the assumption that mnuchin - phillips at least attempt to work on a legislative solution, i'm guessing the time line for any potential resolution is longer than berkowitz, perry, and Paulson are aiming for.  And thus they might shave their expected return for a quicker solution.

 

a voluntary tender offer for the jr preferred around [2/3] of par could build a nice $10bn+ buffer for the two GSEs. and possibly it could resolve some lawsuits.

 

[Guest cherzeca]

if the Sweeney case is settled, do the 1500 documents go away permanently or can one of the other peripheral cases access those?

 

after listening to the congressional hearings, and under the assumption that mnuchin - phillips at least attempt to work on a legislative solution, i'm guessing the time line for any potential resolution is longer than berkowitz, perry, and Paulson are aiming for.  And thus they might shave their expected return for a quicker solution.

 

a voluntary tender offer for the jr preferred around [2/3] of par could build a nice $10bn+ buffer for the two GSEs. and possibly it could resolve some lawsuits.

 

repurchasing equity capital doesnt create equity or regulatory capital

[rros]

if the Sweeney case is settled, do the 1500 documents go away permanently or can one of the other peripheral cases access those?

 

after listening to the congressional hearings, and under the assumption that mnuchin - phillips at least attempt to work on a legislative solution, i'm guessing the time line for any potential resolution is longer than berkowitz, perry, and Paulson are aiming for.  And thus they might shave their expected return for a quicker solution.

 

a voluntary tender offer for the jr preferred around [2/3] of par could build a nice $10bn+ buffer for the two GSEs. and possibly it could resolve some lawsuits.

 

repurchasing equity capital doesnt create equity or regulatory capital

I think he is moving the 1/3 not being paid out to the capital structure in the balance sheet. Almost like a saving, as the Jrs. will disappear.

[Luke 532]

Coming Soon: The Trump Administration’s ‘Principles’ on GSE Reform

https://www.insidemortgagefinance.com/imfnews/1_1220/daily/trump-treasury-gse-reform-plan-coming-soon-1000043388-1.html#Login

 

I'm not saying they're connected events, but I do find it interesting that Stevens announced his retirement at the same event that he announced Trump's GSE plan is coming within weeks.

 

The Treasury Department will likely release principles on housing finance reform – centering on what to do about Fannie Mae and Freddie Mac – within weeks, according to David Stevens, president and CEO of the Mortgage Bankers Association. Speaking at the MBA’s annual convention in Denver, he said the principles will avoid specificity so as not to box-in legislation being drafted in Congress.