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

[Williams406]

Luke 5:32, I'm grateful for the notes. Thank you.

[Luke 532]

Recording of ACG's call was just posted:

[Guest cherzeca]

thanks Luke!

[Luke 532]

-September: Treasury talks restructuring with Houlihan.

-Early February: FHFA hires Houlihan.

-Early February: First thing Houlihan told FHFA was that a settlement is needed to raise capital, per David Metzner.

-Late February: FHFA announces looking for firm.

-Early April: FHFA hires Milbank, Metzner today "this is real non political serious legal advice and that can't be ignored, when Milbank says this is the reason they should settle or this should be in PSPA that recommendation will be taken seriously."

 

[Spekulatius]

I think it is very unlikely that the current government messes with anything related to housing right now that risk are wheels may be coming off. Now if they are forced to due to a very clear court decision  they ist change think I can’t think that setting FNM/FRE free from a politicians point of view. Focus is elsewhere for month if not years and there is serious risk to the housing market.

 

No position.

 

[orthopa]

I think it is very unlikely that the current government messes with anything related to housing right now that risk are wheels may be coming off. Now if they are forced to due to a very clear court decision  they ist change think I can’t think that setting FNM/FRE free from a politicians point of view. Focus is elsewhere for month if not years and there is serious risk to the housing market.

 

No position.

 

The serious risk to the housing market is a result of doing nothing and not having private capital in front of the taxpayer. The risk we are hearing about now relates to mortgage servicers and is manageable and frankly on them/Fed.

 

The majority of what is being discussed relates to capital at FnF and the path to raising it. It does not involve housing policy or the housing market. Your conflating the two.

[orthopa]

Anyone willing to risk hard earn money based on drawings is a fool.  He didn't forecast anything.  You could make the same claim to any stock on this planet and they'd all be down.  If he "saw" it he would've shorted everything.  It's not like he was smart enough like an ackman to actually make money on his "predictions". 

 

I have been bullish all the time last year until the end of September, and you call it "one data point"? If that's your understanding of statistics, then I have nothing further to say.

 

I don't believe a pure mechanical system such as one magical moving average crossing another can provide alpha. My analysis is based on the assumption that Mr. Market may have deeper knowledge than us and watching how Mr. Market reacts to major news may tip off what he thinks.

 

You're the one that brought up a single data point, not me. You're also the one that calls your system TA, which generally implies a high (if not 100%) level of mechanism.

 

I don't understand why your system works or why it should work. If you have had sustainable success with your system, good for you. But a value investing forum is not the place to be gloating about a result of a system that is, from a value investor's perspective, indistinguishable from guesswork.

 

Oh really? When did I say "this is a single data point"? I thought you are smarter than putting words into my mouth to make your arguments look strong.

I came to this thread with the genuine intention to help, but look at the hostility you gave back in return. I am putting you on my ignore list, so no need to respond to this post anymore.

 

muscleman your call from 2019 was epic.  no one can deny that.  going forward please contribute additional calls with any color on your TA work for FnF and don't look back.  There's a good chance your return in that capacity would be appreciated by most or all here.

 

No one? you sure?

 

It wasn't 'epic', it was just him supposedly selling on short term bullishness. Doing so has been smart with FnF, I'll give him that if he actually did, but if you really believe his 'chart' instructed him, you should know it doesn't work that way. No chartist works on stocks/preferreds which trade 10k/day. His chart is absurd.

 

He's basically claiming he called the pandemic.

 

Correct, I would note too that he didn't tell us to buy last week which is a strike against also  ;D

 

I get it, some people like his input as an attempt of forecasting. That's fine but for a while I didn't get it. But after going to a strip club I realized I didn't mind watching the fat girls dance too,  so now I get it.  Even if it doesn't add value it didn't cost you anything if you were going to the strip club/message board anyway. Its usefulness wouldn't be worth going in the back for lack of better comparison.

 

 

 

To be fair, it's not as if he called that the stock would go down. He called the top of an idiosyncratic investment, which topped several months before the top in the overall market.

 

Luck or skill? I can't say, but he certainly did more than what you're implying.

 

Did you sell all or a signficant portion of your position when he/she posted that?

[investorG]

Recording of ACG's call was just posted:

 

thanks for posting and thanks to ACG for the call.  If they are to be believed as even probably correct, the shares should double (at least) Monday; which they won't, suggesting to me their view is likely overly optimistic on either the magnitude of the situation (Gabby gave herself an out if the crisis continues past 8 weeks) or the intentions of FHFA / Trump / Treasury.  For instance the govt (fed) is buying junk bonds for private equity yet they ignore the servicer situation which is very likely reducing the companies' aggressiveness in helping middle class americans with reasonable forbearance opportunities.  And at the same time fight us in court month after month even after the 5th circuit ruled; their actions show their priorities.

[Wiggins]

It's clear receivership is off the table. The ACG Zoom call supports this. The housing conference that Metzner referenced is interesting (it was last October, I'll post link below). In that panel hosted by Jim Parrott, the consensus is that the enemies of the GSEs have lost. It's interesting to listen to Jeb Mason. He's a high-level investment advisor in D.C. and a housing specialist, and he's a total lightweight. It shows the idiocy of people that really don't know what the fuck they're talking about wanting to kill the GSEs. Jarod Bernstein is much more compelling. Now, the only real risk to Fannie/Freddie is an absolute Chernobyl-type meltdown of the economy, however, in this sense the situation reminds me of the old joke about a group of campers in the woods being attacked by a bear. You don't have to outrun the bear, you just can't be the slowest runner. Ginnie Mae and others are the slower runners. By the time the GSEs are in trouble everyone else is toast. Treasury and the Fed won't let this happen, so I feel good about where Fannie and Freddie are perched with their 700+ FICO scores. This provides a lot of safety. I'm holding for sure, and maybe adding.

 

(Panel starts at 5:05:30, warning...this thing is boring as it's mostly a bunch of political drivel)

https://www.urban.org/events/reimagining-housing-closing-equity-and-supply-gaps

 

I think it is very unlikely that the current government messes with anything related to housing right now that risk are wheels may be coming off. Now if they are forced to due to a very clear court decision  they ist change think I can’t think that setting FNM/FRE free from a politicians point of view. Focus is elsewhere for month if not years and there is serious risk to the housing market.

 

No position.

 

The serious risk to the housing market is a result of doing nothing and not having private capital in front of the taxpayer. The risk we are hearing about now relates to mortgage servicers and is manageable and frankly on them/Fed.

 

The majority of what is being discussed relates to capital at FnF and the path to raising it. It does not involve housing policy or the housing market. Your conflating the two.

[Guest cherzeca]

Recording of ACG's call was just posted:

 

thanks for posting and thanks to ACG for the call.  If they are to be believed as even probably correct, the shares should double (at least) Monday; which they won't, suggesting to me their view is likely overly optimistic on either the magnitude of the situation (Gabby gave herself an out if the crisis continues past 8 weeks) or the intentions of FHFA / Trump / Treasury.  For instance the govt (fed) is buying junk bonds for private equity yet they ignore the servicer situation which is very likely reducing the companies' aggressiveness in helping middle class americans with reasonable forbearance opportunities.  And at the same time fight us in court month after month even after the 5th circuit ruled; their actions show their priorities.

 

I thought the junk the fed was buying were "fallen angels"...formerly IG

[Luke 532]

You don't have to outrun the bear, you just can't be the slowest runner. Ginnie Mae and others are the slower runners. By the time the GSEs are in trouble everyone else is toast. Treasury and the Fed won't let this happen

 

Bingo.

[Midas79]

I think it is very unlikely that the current government messes with anything related to housing right now that risk are wheels may be coming off. Now if they are forced to due to a very clear court decision  they ist change think I can’t think that setting FNM/FRE free from a politicians point of view. Focus is elsewhere for month if not years and there is serious risk to the housing market.

 

No position.

 

The serious risk to the housing market is a result of doing nothing and not having private capital in front of the taxpayer. The risk we are hearing about now relates to mortgage servicers and is manageable and frankly on them/Fed.

 

The majority of what is being discussed relates to capital at FnF and the path to raising it. It does not involve housing policy or the housing market. Your conflating the two.

 

I think the big turnaround will come when the consensus becomes that recap and release for FnF is less risky than not doing it.

[Guest Covid-19_Survivor]

You don't have to outrun the bear, you just can't be the slowest runner. Ginnie Mae and others are the slower runners. By the time the GSEs are in trouble everyone else is toast. Treasury and the Fed won't let this happen

 

Bingo.

 

This is true. Further, we're already under govt protection and, apparently, court has determined they screwed us. Safety net.

[TwoCitiesCapital]

Anyone willing to risk hard earn money based on drawings is a fool.  He didn't forecast anything.  You could make the same claim to any stock on this planet and they'd all be down.  If he "saw" it he would've shorted everything.  It's not like he was smart enough like an ackman to actually make money on his "predictions". 

 

I have been bullish all the time last year until the end of September, and you call it "one data point"? If that's your understanding of statistics, then I have nothing further to say.

 

I don't believe a pure mechanical system such as one magical moving average crossing another can provide alpha. My analysis is based on the assumption that Mr. Market may have deeper knowledge than us and watching how Mr. Market reacts to major news may tip off what he thinks.

 

You're the one that brought up a single data point, not me. You're also the one that calls your system TA, which generally implies a high (if not 100%) level of mechanism.

 

I don't understand why your system works or why it should work. If you have had sustainable success with your system, good for you. But a value investing forum is not the place to be gloating about a result of a system that is, from a value investor's perspective, indistinguishable from guesswork.

 

Oh really? When did I say "this is a single data point"? I thought you are smarter than putting words into my mouth to make your arguments look strong.

I came to this thread with the genuine intention to help, but look at the hostility you gave back in return. I am putting you on my ignore list, so no need to respond to this post anymore.

 

muscleman your call from 2019 was epic.  no one can deny that.  going forward please contribute additional calls with any color on your TA work for FnF and don't look back.  There's a good chance your return in that capacity would be appreciated by most or all here.

 

No one? you sure?

 

It wasn't 'epic', it was just him supposedly selling on short term bullishness. Doing so has been smart with FnF, I'll give him that if he actually did, but if you really believe his 'chart' instructed him, you should know it doesn't work that way. No chartist works on stocks/preferreds which trade 10k/day. His chart is absurd.

 

He's basically claiming he called the pandemic.

 

Correct, I would note too that he didn't tell us to buy last week which is a strike against also  ;D

 

I get it, some people like his input as an attempt of forecasting. That's fine but for a while I didn't get it. But after going to a strip club I realized I didn't mind watching the fat girls dance too,  so now I get it.  Even if it doesn't add value it didn't cost you anything if you were going to the strip club/message board anyway. Its usefulness wouldn't be worth going in the back for lack of better comparison.

 

 

 

To be fair, it's not as if he called that the stock would go down. He called the top of an idiosyncratic investment, which topped several months before the top in the overall market.

 

Luck or skill? I can't say, but he certainly did more than what you're implying.

 

Did you sell all or a signficant portion of your position when he/she posted that?

 

Nope. I've been buying on the recent draw down. Have said previously that I've been terrible at selling the rallies in this name, but pretty decent at adding on dips.

[investorG]

I think it is very unlikely that the current government messes with anything related to housing right now that risk are wheels may be coming off. Now if they are forced to due to a very clear court decision  they ist change think I can’t think that setting FNM/FRE free from a politicians point of view. Focus is elsewhere for month if not years and there is serious risk to the housing market.

 

No position.

 

The serious risk to the housing market is a result of doing nothing and not having private capital in front of the taxpayer. The risk we are hearing about now relates to mortgage servicers and is manageable and frankly on them/Fed.

 

The majority of what is being discussed relates to capital at FnF and the path to raising it. It does not involve housing policy or the housing market. Your conflating the two.

 

I think the big turnaround will come when the consensus becomes that recap and release for FnF is less risky than not doing it.

 

according to the doctors we have a multi-year issue on our hands.  So much for calabria's 6 to 8 weeks.  release is likely not on the agenda for a long while.  (Fair) Recapitalization should be.  The President imo is costing himself lots of votes by not injecting non-pspa $ into the GSEs who could then soothe the mortgage system with refinance, forbearance, modifications.

[Guest Covid-19_Survivor]

I think it is very unlikely that the current government messes with anything related to housing right now that risk are wheels may be coming off. Now if they are forced to due to a very clear court decision  they ist change think I can’t think that setting FNM/FRE free from a politicians point of view. Focus is elsewhere for month if not years and there is serious risk to the housing market.

 

No position.

 

The serious risk to the housing market is a result of doing nothing and not having private capital in front of the taxpayer. The risk we are hearing about now relates to mortgage servicers and is manageable and frankly on them/Fed.

 

The majority of what is being discussed relates to capital at FnF and the path to raising it. It does not involve housing policy or the housing market. Your conflating the two.

 

I think the big turnaround will come when the consensus becomes that recap and release for FnF is less risky than not doing it.

 

according to the doctors we have a multi-year issue on our hands.  So much for calabria's 6 to 8 weeks.  release is likely not on the agenda for a long while.  (Fair) Recapitalization should be.  The President imo is costing himself lots of votes by not injecting non-pspa $ into the GSEs who could then soothe the mortgage system with refinance, forbearance, modifications.

 

I'm starting to question the severity of it all.

 

I was thinking this country is doomed because of our freedoms, and a vaccine isn't expected for "12-18 months". But with a decent therapeutic resolving +50% of hospital cases within a reasonable time frame, why wouldn't that work? We'd still have the sickest dying and needing to be isolated, but other than that sad truth, I don't see why the rest can't go back to work. Masks and continued social distancing to help.

 

Via FDA's CTAP program, there are currently 40 theraputics in varying clinical trial stages.

https://clinicaltrials.gov/ct2/results?cond=COVID-19

 

[orthopa]

https://www.bloomberg.com/news/articles/2020-04-13/wall-street-heaps-blame-on-calabria-as-roadblock-to-mortgage-aid

 

There are some great quotes in this one....

 

"Whalen and others who fault Calabria say he’s putting personal politics ahead of doing what’s necessary to get through the pandemic. A common gripe is that Calabria is obsessed with achieving a Trump administration goal of releasing Fannie and Freddie from the government’s grip, so he doesn’t want the companies to extend what little capital they have to prop up mortgage servicers."

 

Wow Mark is a horrible guy for doing what is right.

 

"“Of course they need to step in now,” Jim Parrott, a former Obama administration official who is a consultant for mortgage companies, said of Fannie and Freddie. “If you’re not willing to allow the GSEs to step in when the private market flees and liquidly freezes, then why have government sponsored enterprises at all?”

 

Revenge is best served cold. Im glad that others in the industry finally see the writing on the wall...the GSEs are on their way to be recapped and we finally have a regulator who is committed to following the letter of the law.

[Guest cherzeca]

as 4/5, GSE mortgages in forbearance 2.44%, less than half of GNMA

 

https://www.housingwire.com/wp-content/uploads/2020/04/MBA-forbearance-by-loan-type-1.png

 

up from 2% on 4/1

 

 

so far the take up rate for GSE mortgages is 2%; so far, you are dead wrong.  and this is an issue for servicers in the first instance...

 

data as of april 1.  the law was signed on mar27.  we'll see where it ends up.

[investorG]

as 4/5, GSE mortgages in forbearance 2.44%, less than half of GNMA

 

https://www.housingwire.com/wp-content/uploads/2020/04/MBA-forbearance-by-loan-type-1.png

 

up from 2% on 4/1

 

 

so far the take up rate for GSE mortgages is 2%; so far, you are dead wrong.  and this is an issue for servicers in the first instance...

 

data as of april 1.  the law was signed on mar27.  we'll see where it ends up.

 

It would be nice if this # stayed in the single digits but I don't believe it will.  The number late in the month (right before the payment) is more relevant and also there will likely be homeowners who choose to start their 12 month forbearance period later this year due to a) reduced servicer bottleneck and b) dashed initial hopes of avoiding forbearance as the job situation deteriorates further.

[Guest cherzeca]

as 4/5, GSE mortgages in forbearance 2.44%, less than half of GNMA

 

https://www.housingwire.com/wp-content/uploads/2020/04/MBA-forbearance-by-loan-type-1.png

 

up from 2% on 4/1

 

 

so far the take up rate for GSE mortgages is 2%; so far, you are dead wrong.  and this is an issue for servicers in the first instance...

 

data as of april 1.  the law was signed on mar27.  we'll see where it ends up.

 

It would be nice if this # stayed in the single digits but I don't believe it will.  The number late in the month (right before the payment) is more relevant and also there will likely be homeowners who choose to start their 12 month forbearance period later this year due to a) reduced servicer bottleneck and b) dashed initial hopes of avoiding forbearance as the job situation deteriorates further.

 

I agree this 2.44% forbearance take up will rise over time, but I dont think it will get anywhere near to the level that Zandi decried, shilling for the MBA (which as I recall was 33%-50%).  also remember, this is something potus can turn off by declaration, such that there will be no more new forbearances given.  it would make sense that if in the next few months the return to normalcy is well under way, then potus will make that declaration (if for no reason other than optics).

 

seems to me the metric that is important for GSEs is still delinquencies. forbearance gives the servicers agita, but it is delinquencies that bite the GSEs...and while that % will increase, it starts from a long time low.

[Luke 532]

Treasury giving FHFA "whatever permissions it needs..."  I was watching the coronavirus press briefing last night and can confirm Mnuchin said that.  Very interesting.

[allnatural]

Dream case hypothetical-

 

Calabria: "I am happy to help the servicers, but i need capital in order to do so. How about we write down the snr pfds and give the GSEs a tax credit for the overpayment of $25-$30b, that gets the GSEs to ~$50b of combined capital to start." This is what ACG was alluding to on their recent call.

 

Admin definitely has cover to pull this off (saving housing market), and I imagine this compromise works for MBA (historically anti-recap) as they will get their liquidity wish for servicers.

 

Treasury giving FHFA "whatever permissions it needs..."  I was watching the coronavirus press briefing last night and can confirm Mnuchin said that.  Very interesting.

[Guest cherzeca]

Dream case hypothetical-

 

Calabria: "I am happy to help the servicers, but i need capital in order to do so. How about we write down the snr pfds and give the GSEs a tax credit for the overpayment of $25-$30b, that gets the GSEs to ~$50b of combined capital to start." This is what ACG was alluding to on their recent call.

 

Admin definitely has cover to pull this off (saving housing market), and I imagine this compromise works for MBA (historically anti-recap) as they will get their liquidity wish for servicers.

 

Treasury giving FHFA "whatever permissions it needs..."  I was watching the coronavirus press briefing last night and can confirm Mnuchin said that.  Very interesting.

 

this is a very open ended statement by Mnuchin.  I just wonder if the context in which he made this statement relates to GSEs' own capital/liquidity? 

[investorG]

Dream case hypothetical-

 

Calabria: "I am happy to help the servicers, but i need capital in order to do so. How about we write down the snr pfds and give the GSEs a tax credit for the overpayment of $25-$30b, that gets the GSEs to ~$50b of combined capital to start." This is what ACG was alluding to on their recent call.

 

Admin definitely has cover to pull this off (saving housing market), and I imagine this compromise works for MBA (historically anti-recap) as they will get their liquidity wish for servicers.

 

Treasury giving FHFA "whatever permissions it needs..."  I was watching the coronavirus press briefing last night and can confirm Mnuchin said that.  Very interesting.

 

yes.  but instead of 'dream case hypothetical' it should be 'base case essential'.  Help Americans and right wrongs at the same time. 

[TonyG]

wouldn't that be something. a crisis put them in this mess and a crisis that takes them out of this mess...