navycmdr
17 minutes ago
Treasury already has a Warrant repurchase Plan ... (an example)
Treasury Announces Warrant Repurchase and Disposition Process for the Capital Purchase Program
https://home.treasury.gov/news/press-releases/200962612255225533
2009-6-26-12-25-52-25533
Today, Treasury is announcing its policy with respect to the disposition of the warrants received in connection with investments made under the Capital Purchase Program (CPP). In the case of investments in publicly-traded institutions, Treasury received warrants to purchase common shares which have not been exercised. (In the case of institutions that are not publicly-traded, Treasury received warrants to purchase preferred stock or debt and these warrants were exercised immediately upon closing the initial investment so they are no longer outstanding.)
Repurchasing Warrants under the CPP Contract
When a publicly-traded institution repays Treasury's CPP investment, the original contract under the CPP provides the bank a right to repurchase the warrants at fair market value via an independent valuation process. The relevant sections of the transaction documentation describing this process can be found in the Warrants FAQ on www.financialstability.gov.
The warrant repurchase process works as follows:
Step 1: Within 15 days of repayment, a bank wishing to repurchase the warrants should submit a determination of fair market value to Treasury.
Step 2: Treasury will ensure that taxpayers' interests are protected by conducting a process (described below) to determine whether or not to accept the bank's initial determination. Under the contract, Treasury has 10 days to respond to the initial determination.
Step 3: If Treasury objects to the bank's determination and cannot reach agreement with the bank regarding fair market value, the transaction documents outline an appraisal procedure by which the two parties will reach a final price. In this appraisal procedure, the bank and Treasury will each select an independent appraiser. These independent appraisers will conduct their own valuations and attempt to agree upon the fair market value.
Step 4: If these appraisers fail to agree, a third appraiser is hired, and subject to some limitations, a composite valuation of the three appraisals is used to establish the fair market value.
In order to protect taxpayers in this process, Treasury has developed a robust set of procedures for evaluating repurchase offers in Step 2 above. Treasury's determination of value is based on three categories of input:
JSmith5
27 minutes ago
I got the 90-95% common ownership part from this segment John Paulson did with CNBC. I didn't hear any mention of lawsuits there.
Since I posted that I read where he has said about the 90-95% in several interviews so I am not sure which one. But I think his comment on lawsuits is prudent and, like I said this is sort of like an aside as it won't impact anything.
The question isn't whether or not lawsuits will be filed, it's whether there's any reason to believe they will succeed
Right - Hopefully the Government won't think they have a snowball's chance. The way it works on the Government side is that, for the purposes of the liability portion of their financial statements, they just can't blow off any lawsuits. FHFA and Treasury will run them past their respective OGCs who will assign a probability of a Government loss and possible associated amount. One of them, or a combination of them reaches a certain amount, it could set off the alarm. Not that we would lose, just that it may cause a delay.
Nats
navycmdr
29 minutes ago
Mortgage Rates Continue to Decrease
December 05, 2024 12:00 ET - | Source: Freddie Mac
MCLEAN, Va., Dec. 05, 2024 (GLOBE NEWSWIRE) -- Freddie Mac (OTCQB: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the 30-year fixed-rate mortgage (FRM) averaged 6.69 percent.
“This week, mortgage rates decreased to their lowest level in over a month,” said Sam Khater, Freddie Mac’s Chief Economist. “Despite just a modest drop in rates, consumers clearly have responded as purchase demand has noticeably improved. The responsiveness of prospective homebuyers to even small changes in rates illustrates that affordability headwinds persist.”
News Facts
- The 30-year FRM averaged 6.69 percent as of December 5, 2024, down from last week when it averaged 6.81 percent. A year ago at this time, the 30-year FRM averaged 7.03 percent.
-The 15-year FRM averaged 5.96 percent, down from last week when it averaged 6.10 percent. A year ago at this time, the 15-year FRM averaged 6.29 percent.
The PMMS® is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit. For more information, view our Frequently Asked Questions.
Freddie Mac’s mission is to make home possible for families across the nation. We promote liquidity, stability, affordability and equity in the housing market throughout all economic cycles. Since 1970, we have helped tens of millions of families buy, rent or keep their home. Learn More: Website | Consumers | X | LinkedIn | Facebook | Instagram | YouTube
MEDIA CONTACT:
Angela Waugaman
(703)714-0644
Angela_Waugaman@FreddieMac.com
trunkmonk
42 minutes ago
yup, the crowd he formed follows him on boards, He and they are bashing the daylights out of it whenever it goes up, they hate hate hate commons, they have done terrible and illegal things to harm commons, next Admin will send them all packing into the lake of sulfur, sick freaks everyone of them.
navycmdr
2 hours ago
Fannie / Freddie words to "invest" "trade" & "live" by ...
" If " - by RUDYARD KIPLING ... written 1895
“If” is a poem written by the English poet and novelist Rudyard Kipling in 1895. The poem is a set of moral instructions addressed to the poet’s son, and it offers advice on how to live a virtuous and fulfilling life.
The poem is written in the form of a series of conditional statements, with each stanza beginning with the word “If.” The poem’s central theme is the importance of self-discipline, perseverance, and humility in the face of life’s challenges.
The poem emphasizes the need for the reader to remain calm, focused, and resolute in the face of adversity. Kipling emphasizes the importance of self-control, urging the reader to keep their head “when all about you / Are losing theirs and blaming it on you.”
The poem also emphasizes the importance of taking responsibility for one’s actions and accepting the consequences of one’s choices. Kipling urges the reader to “meet with triumph and disaster / And treat those two impostors just the same.”
Ultimately, the poem offers a vision of what it means to be a true and honorable person, emphasizing the importance of character, integrity, and moral courage. The poem’s final stanza offers a vision of a life well-lived, in which the reader has become “a Man, my son.”
kthomp19
2 hours ago
No - I don't believe it does - that's why some are pushing for it to help with any capital raise - but could be wrong there.
It depends on what type of regulatory capital you're talking about.
A junior-to-common conversion doesn't change core or Tier 1 capital, but it does add to CET1 capital. $19B for Fannie, $14B for Freddie.
But I do expect the Ps to be converted to make any cap raise easier
I agree. Not only does a junior-to-common conversion add to CET1 capital at no cost to the companies, it also allows them to issue new preferred shares later on if they want to raise capital quickly. It will be much easier to do that with new preferred shares than new common shares. I'm not sure if this is coincidence or not, but the ERCF allows for around $33B worth of non-cumulative preferred shares in the capital stack, which is exactly the amount FnF have combined right now in the form of the junior prefs.
I expect the new, post-restructuring common shares to do quite well. Owning the juniors now is a much cheaper way to own the post-restructuring common compared to just buying the pre-restructuring common now.
kthomp19
2 hours ago
The SPSPA is an illegal contract between two government agencies, illegal by reason of the commitment fee attached to the Senior Preferred Stock.
It isn't illegal until and unless a court overturns it. That hasn't happened, thus your characterization of the SPSPAs as "illegal" is merely your opinion, not a fact.
The NWS was a clear violation of one of the FHFA director's core duties, which was maintenance of adequate capital for FnF (12 USC 4513(a)(1)(B)(i)), and yet the Supreme Court said it was fine. It's not what you know (and certainly not what you say on a message board), it's what you can prove in court.
File your own lawsuit, shut up, or be exposed as a hypocrite.
Safety and Soundness still exists just as the Charter Act still exists.
And the Supreme Court allowed FHFA to ignore its safety and soundness mandate due to 12 USC 4617(b)(2)(J)(ii). Keep that in mind.
kthomp19
2 hours ago
Were they actually even challenged?
The NWS dividends? Of course. That was the entire purpose of the lawsuit, that the FHFA signing the NWS on behalf of the companies and paying the NWS dividends despite FnF's complete lack of regulatory capital was ultra vires. The Fifth Circuit en banc panel found in the plaintiffs' favor on that count, but the Supreme Court overturned that verdict.
Are you suggesting that the Director can pay jr pref and common dividends right now if they wanted to?
Yes, though Treasury would have to agree to it per the terms of the SPSPAs.
I didn't say anything about regulatory capital.
There is no other kind. Net worth and capital are not the same thing.
Tell me what does the payment of dividends out of 'funds legally available' mean? That is a clause implicit or explicit in dividend paying stock.
I always saw it as a boilerplate phrase, though in the case of FnF's conservatorships it could have more teeth. I had thought that the FHFA director's core duty of maintenance of adequate capital at FnF would have prevented them from paying the NWS dividends, but the Supreme Court truly did find an elephant in the mousehole when they ruled that FHFA's incidental powers clause (allowing them to act in their own best interest) overrode that core duty.
That's also why I think FHFA can direct FnF to pay junior pref and common dividends no matter their regulatory capital levels, though again per the terms of the SPSPAs, Treasury would have to approve any such dividends.
The contracts were amended to an 'unlimited' amount in 2012?
No. This page on FHFA's website with links to all the agreements and amendments has links to:
1) The original SPSPAs that established the funding commitment of $100B per company
2) The first amendment that increased the total funding commitment to $200B per company
3) The second amendment that increased the total funding commitment to "$200,000,000,000 plus the cumulative total of Deficiency Amounts determined for calendar quarters in calendar years 2010, 2011, and 2012, less any Surplus Amount determined as of December 31, 2012, and in the case of either (a) or (b), less the aggregate amount of funding under the Commitment prior to such date."
Rodney is correct on several matters and not way out there like others.
He is utterly wrong about many things, like the SPSPAs being illegal, his idea that the FHFA director can tell FnF to pay down the seniors without Treasury's approval
kthomp19
2 hours ago
Why would he be opposed to us? Sounds like he likes utility model which is probably fine by us.
The MBA, along with many other vested interests, only want FnF released if it's via legislation that also establishes an explicit government guarantee on GSE MBS.
By contrast, the release that Calabria and Mnuchin were working toward, and the one contemplated by John Paulson, doesn't involve Congress (and by extension that explicit guarantee) at all.
You can tell from the article how desperately the MBA wants that explicit guarantee. I think it's the primary reason they have been opposed to recap and release in the past: they have been wanting FnF held hostage with the explicit guarantee as a condition of release. But their power is not absolute, fortunately.
Just means we should anticipate 1/3 of earnings going back to us in dividends and overall expect high single digit total returns.
You keep forgetting the most important thing: the post-restructuring share count. Without an estimate of that, any future share price estimate is worthless.
kthomp19
2 hours ago
Actually $FNMA~ went up to $4.50 + after he said that and didn't see $1 until Covid crashed the world markets over two years later.
In other words, Bose George was right. FNMA closed at $1.06 on December 31 2018, well before Covid and quite close to the $1 target.
And far, far better than the thousands of posts here that predicted share prices in the upper single digits, teens, 20s, 30s, 100s, 300s, etc.
Any time Guido insults someone it means the recipient is on to something. I have found few other indicators as reliable as that.
kthomp19
2 hours ago
Kt keeps preaching the Shareholders owes the Treasury. No, it’s the other way around.
Wrong. The courts have said Treasury doesn't owe the shareholders a penny, as shown by Treasury's perfect record in the NWS cases.
With a 8-0 jury verdict and former FHFA Director saying the Treasury has been paid in full.
1) The verdict was against Fannie and Freddie, not against Treasury. Fannie and Freddie will be paying the damages, not Treasury.
2) Which former FHFA director? Calabria said in his book that he thinks a senior-to-common conversion is the best way to resolve the senior pref overhang.
Federal Statutes do not allow the Treasury to attach a commitment fee onto the Senior Preferred Stock. THEREFORE, by reason of Federal Statute, the Treasury owes the companies the overage payment on $191.4 billion total draws from Treasury, plus compounded interest
Quite the legal theory you have there! No plaintiff has tried that one in court to my knowledge.
You know the drill: file your own lawsuit, shut up, or be shown to be a hypocrite. You have consistently chosen door #3.
With the amount of time and effort you have put into researching your posts you could have filed several lawsuits by now. Why haven't you?
kthomp19
2 hours ago
You keep repeating the SCOTUS validating the Net Worth Sweep. That’s not what happened.
Wrong. The Supreme Court said that the NWS was a valid act of a conservator and thus not ultra vires, reversing the Fifth Circuit en banc panel's decision.
The Court dismissed the lawsuit.
The lawsuit claimed that the NWS was illegal and the lawsuit was dismissed, thus it was not found to have been illegal. The NWS survived a direct challenge, which makes it as legal as it's possible to be.
The Supreme Court basically said we will not rule or give Judgment are act as an arbitrator on the contract the SPSPA. So, the NWS was not validated as legal or illegal by the Court:
Wrong on both counts, see above.
Three more strikes for you and another out. Shameful.
JSmith5
2 hours ago
As a stockholder, no warrant exercise would work for me. As taxpayer, now even more with DOGE on the loose - they will. As an investor, it would not be prudent to ignore them. Clearly the seniors are the wildcard here.
As a common holder, I would have to see what kind of a conversion deal the Ps would get before I pass judgement. The choices are turn on the 6% $2B in dividends, cash them in (up to $33B) or convert them. As a P holder any of the 3 is a win. Maybe not as big a win as commons, but a win.
I think, all things considered, I would expect that conversion would increase the likely hood of a speedier and successful exit.
Nats