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

[asterisk]

FHFA is directing Fannie Mae and Freddie Mac to contribute a record high $1.09 billion to the national Housing Trust Fund & Capital Magnet Fund, more than *double* the amount the GSEs contributed last year. The $ is distributed through Treasury & HUD to further affordable housing

 

Still stealing money from the GSEs, the robbery has not ended...

 

I didnt see this TV, can you provide link?

 

https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Authorizes-More-than-$1-Billion-for-Affordable-Housing-Funds.aspx

 

While annoying, hasn't it becoming consensus that affordable housing will be the bargaining chip?

[Guest cherzeca]

thanks TV.  I wonder if this was an attempt to forestall a congressional push to extend the 10bps G fee "surcharge" that lapses this October...

 

Edit:  I think this is just a function of the surge in new loans guaranteed during 2020...4.2bps of new loans guaranteed goes to these funds...so no new policy here

[typicalvalue]

 

Seems like the Brookings paper is pretty aligned with Biden interests (by Gasparino source), and what was obvious that Calabria is toast posts-scotus.

[orthopa]

With Calabrias fate decided or expect to be negatively decided we can expect to hear zero out of him going forward for the next couple of months. What else is there left for him to say? He was left at the altar. Fingers can be pointed all around as to what happened and why but it seems nearly all the work he put in over the last 2 years was a big waste of time. I wonder if any of his work sticks around. The capital rule will likely be tweaked again but do they go through the process of getting new FAs again?

[orthopa]

Im looking to move some stuff to Interactive Brokers. I called and they said that the preferred are not listed as a ticker/security that they trade or have access to. Does anyone hold an account at IBKR and have the preferred with them? They have some pretty weird OTC stock rules it seems.

 

TIA.

[longtermdave]

Im looking to move some stuff to Interactive Brokers. I called and they said that the preferred are not listed as a ticker/security that they trade or have access to. Does anyone hold an account at IBKR and have the preferred with them? They have some pretty weird OTC stock rules it seems.

 

TIA.

 

Strange. I bought and hold a few of the jr preferred series in IBKR. I've never had a problem trading them.

[Midas79]

Im looking to move some stuff to Interactive Brokers. I called and they said that the preferred are not listed as a ticker/security that they trade or have access to. Does anyone hold an account at IBKR and have the preferred with them? They have some pretty weird OTC stock rules it seems.

 

TIA.

 

I have all my FnF shares at IB now. I am able to trade every series I keep track of, which is 34 of them, including the variable-rates. I haven't tried to trade FNMFO or the privately-placed Freddie juniors (FREJO, FREJP, maybe there's one or two more?) though.

[Sunrider]

Those work too.

Im looking to move some stuff to Interactive Brokers. I called and they said that the preferred are not listed as a ticker/security that they trade or have access to. Does anyone hold an account at IBKR and have the preferred with them? They have some pretty weird OTC stock rules it seems.

 

TIA.

 

I have all my FnF shares at IB now. I am able to trade every series I keep track of, which is 34 of them, including the variable-rates. I haven't tried to trade FNMFO or the privately-placed Freddie juniors (FREJO, FREJP, maybe there's one or two more?) though.

[TwoCitiesCapital]

I, too, own FMCCJ at IB

[typicalvalue]

Im looking to move some stuff to Interactive Brokers. I called and they said that the preferred are not listed as a ticker/security that they trade or have access to. Does anyone hold an account at IBKR and have the preferred with them? They have some pretty weird OTC stock rules it seems.

 

TIA.

 

The CS folk who informed you is wrong. Have all my funds in IB and you have access to all series of jrs FNMA/FMCC, so you shouldn't have any problem. You have to accept some trading permissions to buy OTC, and then you can trade it.

[orthopa]

Sounds great guys/girls thanks!

[muscleman]

I bought a small FNMAS at 5.7. (2.5% of portfolio). This is a mid to low confidence entry so I wouldn't go big. I don't see anything positive fundamentally from this thread, so I am a bit cautious, but the technical setup looks interesting indeed. Please correct me if you think something positive is coming.

[Wiggins]

I bought a small FNMAS at 5.7. (2.5% of portfolio). This is a mid to low confidence entry so I wouldn't go big. I don't see anything positive fundamentally from this thread, so I am a bit cautious, but the technical setup looks interesting indeed. Please correct me if you think something positive is coming.

 

Welcome back to the trade.

 

I think the general consensus of the rank order of possible outcomes for the SCOTUS decision is as follows:

1) FHFA unconstitutionally structured, no backward relief; NWS violates APA with remand for remedy back to lower court.

2) FHFA unconstitutionally structured, backward relief; (APA ruling doesn't matter in this scenario)

3) FHFA constitutionally structured, NWS legal

 

I view this as very positive. I would expect JPS to retest highs since 2008 in either scenario 1 or 2. I would be very interested in other views, particularly if anyone is considering the possibility that SCOTUS somehow rules on direct claims for shareholders who held at the time of the NWS. Michael Kao obliquely made reference to this in one of recent tweet threads although I believe he puts it at low probability.

[muscleman]

I bought a small FNMAS at 5.7. (2.5% of portfolio). This is a mid to low confidence entry so I wouldn't go big. I don't see anything positive fundamentally from this thread, so I am a bit cautious, but the technical setup looks interesting indeed. Please correct me if you think something positive is coming.

 

Welcome back to the trade.

 

I think the general consensus of the rank order of possible outcomes for the SCOTUS decision is as follows:

1) FHFA unconstitutionally structured, no backward relief; NWS violates APA with remand for remedy back to lower court.

2) FHFA unconstitutionally structured, backward relief; (APA ruling doesn't matter in this scenario)

3) FHFA constitutionally structured, NWS legal

 

I view this as very positive. I would expect JPS to retest highs since 2008 in either scenario 1 or 2. I would be very interested in other views, particularly if anyone is considering the possibility that SCOTUS somehow rules on direct claims for shareholders who held at the time of the NWS. Michael Kao obliquely made reference to this in one of recent tweet threads although I believe he puts it at low probability.

 

Thank you! What's the expected timeline for SCOTUS to rule on this thing? Sometime in September? April?

[MrSwankyPants]

ROLG has around April 1 pegged as the date. I believe this is based on Selia Law's timing last year.

[muscleman]

ROLG has around April 1 pegged as the date. I believe this is based on Selia Law's timing last year.

 

Thank you! I appreciate it

[asterisk]

Reports of future changes to the PSPA...

 

https://www.americanbanker.com/news/lenders-urge-biden-to-remove-gse-cap-on-high-risk-loans

 

Caps on certain loans answer cash window was insisted by Mnuchin.

[typicalvalue]

Another well written piece by Hindes on the path ahead.

 

http://delawarebayllc.com/images/Time_for_a_fresh_look_2.pdf

[orthopa]

Another well written piece by Hindes on the path ahead.

 

http://delawarebayllc.com/images/Time_for_a_fresh_look_2.pdf

 

My impression is the Lamberth Trial was not going to start until the end of 2022 but if hindes is correct will be sooner. Getting summary judgement seems the quickest/best way to go.

[Wiggins]

Another well written piece by Hindes on the path ahead.

 

http://delawarebayllc.com/images/Time_for_a_fresh_look_2.pdf

 

My impression is the Lamberth Trial was not going to start until the end of 2022 but if hindes is correct will be sooner. Getting summary judgement seems the quickest/best way to go.

 

Nice to see Tim Howard weigh in

jtimothyhoward

MARCH 13, 2021 AT 11:20 AM

I generally don’t comment on the investment aspects of the potential resolution of Fannie and Freddie’s 12-year conservatorships–the focus of this blog instead has been on making the case for using facts as the basis for releasing the companies in a form that maximizes their value to ALL stakeholders, not just investors–but in this piece I thought Gary made a compelling case for Fannie and Freddie junior preferred stock as an investment.

[orthopa]

https://www.bnnbloomberg.ca/gop-s-toomey-seeks-democratic-support-to-free-fannie-and-freddie-1.1577201.amp.html?__twitter_impression=true&s=09

[DocSnowball]

https://www.bnnbloomberg.ca/gop-s-toomey-seeks-democratic-support-to-free-fannie-and-freddie-1.1577201.amp.html?__twitter_impression=true&s=09

Interesting to hear something after a period of quiet. Such principles in the past have not led to much, so take it FWIW. I guess what Congress can offer, that others cannot, is explicit guarantee and additional charters.

 

This from Senate housing page:

https://www.banking.senate.gov/newsroom/minority/toomey-outlines-housing-finance-reform-principles

Ranking Member Toomey’s principles call on Congress to enact housing finance reform legislation to:

 

 

Transition the GSE duopoly toward a competitive secondary market;

End the conservatorships of Fannie Mae and Freddie Mac;

Establish a level playing field for other sources of private capital that bear mortgage credit risk;

Foster a liquid secondary mortgage market that promotes the continued availability of affordable 30-year and other long-term fixed-rate mortgage loans across the United States and throughout the economic cycle;

Protect taxpayers by ensuring that significant first-loss private capital stands in front of any government support and that taxpayers are appropriately compensated for that support;

Promote equitable access to the secondary mortgage market by mortgage lenders of all sizes, business models, charter types, and locations; and

Provide for a smooth transition to the reformed housing finance system by ensuring that reforms are incremental and realistic, leveraging the existing regulatory and market structure.

 

The additional quote is not on the website, and adds color:

Amanda Thompson, the communications director for Toomey and other banking panel Republicans, said the announcement signals an openness to creating something many GOP lawmakers have long resisted: a federal guarantee of the trillions of dollars of mortgage bonds that Fannie and Freddie issue.

[investorG]

Is Tim Howard correct or not when he says the Lamberth case is derivative?

 

ps: 1000 posts....what a mess this has been.

[Wiggins]

Is Tim Howard correct or not when he says the Lamberth case is derivative?

 

ps: 1000 posts....what a mess this has been.

 

Tim Howard's correction (and answer to your question):

 

[4:30 pm correction] A holder of the companies’ junior preferred stock called my attention to a fall 2018 conference call with David Thompson, counsel to plaintiffs in the Perry Capital case (and other cases), in which David made clear that damages in the claim of breach of implied covenant of good faith and fair dealing now before judge Lamberth would, if granted, be payable by the government to the current holders of Fannie and Freddie’s junior preferred securities. I do not know if the same would be the case in the event of a favorable ruling for plaintiffs in the Court of Federal Claims. I withdraw the statement I made about damages here and in the comment above (and apologize for the error).

[allnatural]

Collins APA = Derivative

Collins Constitutional = Derivative

Court of Federal Claims Takings = Derivative

Lamberth Contractual Claims = Direct