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Fannie Mae (QB)

Fannie Mae (QB) (FNMAG)

17.50
0.40
(2.34%)
Closed December 10 4:00PM

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Key stats and details

Current Price
17.50
Bid
15.75
Ask
17.49
Volume
880
16.50 Day's Range 17.50
0.00 52 Week Range 0.00
Market Cap
Previous Close
17.10
Open
16.50
Last Trade
102
@
17.5
Last Trade Time
Financial Volume
$ 14,724
VWAP
16.73
Average Volume (3m)
-
Shares Outstanding
1,158,087,567
Dividend Yield
-
PE Ratio
565.38
Earnings Per Share (EPS)
-
Revenue
26.87B
Net Profit
3M

About Fannie Mae (QB)

Fannie Mae is a government-sponsored enterprise that was chartered by Congress in 1938 to support liquidity, stability and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold. Fannie Mae is a government-sponsored enterprise that was chartered by Congress in 1938 to support liquidity, stability and affordability in the secondary mortgage market, where existing mortgage-related assets are purchased and sold.

Sector
Mortgage Bankers & Loan Corr
Industry
Mortgage Bankers & Loan Corr
Headquarters
Washington, District Of Columbia, USA
Founded
-
Fannie Mae (QB) is listed in the Mortgage Bankers & Loan Corr sector of the OTCMarkets with ticker FNMAG. The last closing price for Fannie Mae (QB) was $17.10. Over the last year, Fannie Mae (QB) shares have traded in a share price range of $ 0.00 to $ 0.00.

Fannie Mae (QB) currently has 1,158,087,567 shares outstanding. The market capitalization of Fannie Mae (QB) is $19.80 billion. Fannie Mae (QB) has a price to earnings ratio (PE ratio) of 565.38.

FNMAG Latest News

Free Real-Time Level 2 Quotes Available in Fannie Mae and Freddie Mac at OTCMarkets.com

Free Real-Time Level 2 Quotes Available in Fannie Mae and Freddie Mac at OTCMarkets.com PR Newswire NEW YORK, Dec. 5, 2013 NEW YORK, Dec. 5, 2013 /PRNewswire/ -- Investors and traders in Fannie...

PeriodChangeChange %OpenHighLowAvg. Daily VolVWAP
10000000PR
40000000PR
120000000PR
260000000PR
520000000PR
1560000000PR
2600000000PR

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FNMAG Discussion

View Posts
Ispro Ispro 36 minutes ago
350 LOL
👍️0
mrfence mrfence 3 hours ago
The Senate would only function to sign off on legislative reform written and passed by Congress. No new legislation. has been written to date ,
👍️0
EternalPatience EternalPatience 4 hours ago
Keep trying harder. You will convince someone some day, some month, some year

I will wait for Ackman to be that idiot first
👍️0
FNM500K FNM500K 4 hours ago
Yeah buddy!! Our good luck charm. 

Let's hope for green again tomorrow. Keep this up man... you sure do bring us luck!
👍️0
mrfence mrfence 4 hours ago
Actually, Ralph Nadar's letter ran us to about $5.50 from a buck back in the day. Imagine the run we'd see if Trump picked the founder of CapWealth that wrote the book, Another Big Lie: How the Government Stole Billions from the American Dream of Home Ownership. and Got Caught!, as the new FHFA Director.

Lately he's been in communicato with Trump's team stating they're talking about writing down the Senior Pref and Warrants as a matter of fairness and ethics almost as if he's already a part of that team.
https://timpagliara.com/
👍 1
MRJ25 MRJ25 5 hours ago
Howard says that the twins are already reformed. Don Layton stated the same years ago.
What are "they" waiting for?
They, meaning the senate.
👍️ 2
jog49 jog49 6 hours ago
Unfortunately, Howard carries the same weight of impact as Ralph Nader thought he did, which was not much.
👍️0
amelia43 amelia43 7 hours ago
Yeah then back to $2’s. But it’s different this time.

You’d think that $90 article would at least get us a quarter today.
👍️ 1
navycmdr navycmdr 9 hours ago
Catman ..

👍️ 7
RickNagra RickNagra 9 hours ago
https://x.com/real_human101/status/1866227556019577264?s=46&t=xLP2LlWgJrEMUZZ7Fum-nA
👍️ 3
DCBill DCBill 9 hours ago
Suggestion: Go to his blog, tell him what you think, and ask him to explain. He's a brilliant guy and I know he spent a lot of time drafting his latest piece.
👍️ 4
Sammy boy Sammy boy 9 hours ago
Load up, you know how many times I heard someone is loading up? Maybe your underwear.

Load up usually means RED with this group the next day.

Thanks for mushing the stock !
👍️ 1
Clark6290 Clark6290 10 hours ago
Never gets old. I sense you are being mean to me
👍️0
PennMilitia PennMilitia 10 hours ago
The concern is-no-longer if release is going-to-happen

The concern now has shifted 100% as to what are the terms of the release of Fannie Mae and Freddie Mac from conservatorship.

The new admin and the new U.S. Treasury Secretary are ready to make this happen. We are now awaiting the last piece of the puzzle to be announced. The new FHFA director is going to be a very big deal.
👍️ 13
EternalPatience EternalPatience 10 hours ago
Same old joke day in day out

Thank God standup is not your daytime job
👍️ 2
trunkmonk trunkmonk 10 hours ago
those that say Treasury and FHFA are separate authority, NOT, SM drove the Buss, and shifted tubby on how to think and which way to go, so MC did. Once SM was out of the way and President could fire Director, he did. Biden was just a puppet for whatever social whim of congress and his staff, he just took the easy path. Get him out and put useless entitlement believing flunky in charge, which he did, Mad Max said she is not interim, she can do the job. do what job? nothing good and only more illegal stuff at the whim of Finance committee.
👍️ 6
mrfence mrfence 11 hours ago
Learn to wipe your Ask
All those Kitty 😺 Litter dingle berries are grossing everyone out
👍️ 3
krab krab 11 hours ago
Loading up, going towards the $3+
👍️ 5
mrfence mrfence 11 hours ago
You're NEVER getting your old job back Catman. Kiss all those free Chicken lunches goodbye 👋
💯 1 😆 1
FFFacts FFFacts 11 hours ago
Learn to embed x
👍️0
FFFacts FFFacts 11 hours ago
You are clueless if you think other stakeholders didn't have a say.
👍️0
FFFacts FFFacts 11 hours ago
Go back to watching your youtube videos and porn all day long. mrs. fence
👍️0
Stern is Bald Stern is Bald 11 hours ago
I bought some around 330
👍️ 2
krab krab 11 hours ago
The bum will just FART and keep laughing like Kamala
😂 1
JOoa0ky JOoa0ky 11 hours ago
Three Fifty Wall
👍️0
mrfence mrfence 12 hours ago
HOWARD ON MORTGAGE FINANCE
Commentary on current mortgage finance issues

Release 2.0
December 9, 2024 ~ 12 Comments
On November 30, 2016, President-elect Donald Trump’s choice for Treasury Secretary, Steven Mnuchin, said, “It makes no sense that [Fannie Mae and Freddie Mac] are owned by the government and have been controlled by the government for as long as they have,” adding, “we gotta get them out of government control….and in our administration it’s right up there in the list of the top ten things we’re going to get done, and we’ll get it done reasonably fast.”

The first Trump administration, of course, never did. Mnuchin has not addressed this issue publicly, but former FHFA Director Mark Calabria does discuss it in his book, Shelter from the Storm, albeit briefly and vaguely, and essentially blaming Mnuchin. He states, “Secretary Mnuchin generally felt that any option had to maintain Treasury’s priority in the capital structure. Treasury could be heavily diluted, and almost certainly would have to be, but it did not want to see that accomplished by losing its standing.” Later Calabria says, “We were ready to conduct a restructuring by late summer 2020” (without specifying how they were planning to deal with Treasury’s senior preferred stock or its liquidation preference in the companies,) and goes on to ask, ”[since] we had well-developed restructuring plans by late summer 2020, why did none of them happen? First, I believed both the Treasury and the White House wanted to push the issue until after the election. Since any change had the potential to create short-run volatility in the mortgage market, I believe the administration did not want to run that risk….[Then], once the election was behind us, Mnuchin’s attention clearly turned to his post-Treasury plans. Any restructuring, to be successful, would have offended somebody. We did not get it done because Mnuchin did not want to upset anyone on his way out the door, including incoming Treasury secretary Janet Yellen.”

This is just Calabria’s side of the story. The more complete version is that he and Mnuchin had different objectives for the restructuring of Fannie and Freddie that they were unable or unwilling to reconcile. More problematically, both of their objectives were based on fictions about the companies, not facts, and the institutional investors whose participation was essential for the recapitalization of Fannie and Freddie knew this. Mnuchin seemingly wanted Treasury to be repaid twice for 2008 “rescues” the companies did not request and did not need, while Calabria was insisting on “hardwiring” the entirely arbitrary 80 percent increase in required capital he had imposed on Fannie and Freddie in December of 2020, creating a severe handicap for their business. The investment community was being asked to bear the cost of both of these non-economic objectives, which was unreasonable to expect it to be willing to do.

During the Biden administration, Treasury Secretary Yellen and FHFA Director Thompson showed no interest in addressing Fannie and Freddie’s conservatorships. Yellen simply was silent on the matter, while Thompson repeatedly said she would defer to Congress to solve the problem through some unspecified type of legislative “reform.” But the companies have been reformed. They no longer are allowed to hold mortgages in portfolio—which had been the main objection to them prior to the conservatorships—and along with primary lenders are subject to the “ability to repay” provision of the 2010 Dodd-Frank Act that prohibits the toxic loan types and lending practices that triggered the 2008 financial crisis. Moreover, Fannie and Freddie’s entity-based business model—in which revenues on good loans from all years, regions and loan types are available to cover losses on any loans that go bad—is already far superior to the senior-subordinated model used in private-label securitizations (PLS). In the PLS model, each pool must stand on its own, and the inability to reach beyond it for revenues, or add capital post-securitization, requires substantial initial subordination, which translates into much higher credit guaranty costs and still leaves the holders of the senior tranches exposed to any losses that exceed the fixed loss-absorbing capacity of the subordinated tranches. Fannie and Freddie’s credit guaranty model is the gold standard.

So now, the second Trump administration is inheriting two companies that together finance 48 percent of the $14.1 trillion of single-family mortgages in America, have been extremely profitable for the last dozen years and need no further reform, yet because of policy choices made during previous administrations remain mired in conservatorships that would take them almost 15 years to emerge from on their own, during which their current degree of overcapitalization would continue to prevent them from providing affordable mortgage financing to the low- moderate- and middle-income families they were chartered to serve.

Are there any reasons to believe that the new Secretary-designate of the Treasury, Scott Bessent, might have better luck in “getting them out of government control” than Steven Mnuchin did? In fact, there are, because of all of the changes in Fannie and Freddie’s circumstances and condition that have occurred over the past eight years.

Perhaps most significantly, at the end of 2016 Treasury still was institutionally committed to “winding down and replacing” Fannie and Freddie legislatively, as it had been since before Secretary Paulson put them into conservatorship. This goal was driving Treasury’s policies toward the companies, as memorialized in a December 12, 2011 Draft Internal Memorandum for Treasury Secretary Geithner, containing “a plan with FHFA to transition the GSEs from their current business model of direct guarantor to a model more aligned with our longer-term vision of housing finance.” Components of this plan included guaranty fee increases that would continue “until pricing reaches levels that are consistent with those charged by private financial institutions with Basel III capital standards” (irrespective of risk), a single securitization platform for Fannie and Freddie (which could be used by their successors or competitors), securitized sharing of credit risk (which the memo said “would likely reduce the earnings capacity of the GSEs”), and “faster retained portfolio wind down.” All of these were done. This same memo also contained a proposal to “Restructure the calculation of Treasury’s dividend payments from a fixed 10 percent annual rate to a variable payment based on available net worth (i.e., establish an income sweep).” That, of course, was done as well, eight months later, and it became known as the net worth sweep.

But after the November 2018 midterms, which moved the House of Representatives under Democratic control, virtually the entire financial community, along with Treasury, gave up on the idea of trying to replace Fannie and Freddie. Numerous efforts—including the first Corker-Warner bill in 2013, Johnson-Crapo in 2014, and what was called “Corker-Warner 2.0” early in 2018—all had flaws that prevented them from generating any momentum, and a divided Congress was the final blow to the aspirational notion that it might be possible to create a viable alternative to Fannie and Freddie legislatively. Removal of the companies from conservatorship would need to be done by administrative action. And here is where the problem arose. As I wrote in a January 2020 post titled How We Got to Where We Are, “the fictions about Fannie and Freddie that were essential elements of the attempt to replace the companies in a legislative process become impediments when the goal is to successfully recapitalize and release them in an administrative process.”

In his book, On the Brink, Secretary Paulson falsely says,“Fannie and Freddie were the most egregious example of flawed policies that inflated the housing bubble and set off the financial crisis.” Throughout the first ten years of the companies’ conservatorships, that was the version of them repeated by the financial media—and Treasury—and the $187 billion in Treasury senior preferred stock Fannie and Freddie had drawn between 2008 and 2011 was universally viewed as the cost to taxpayers of their profligacy. Very few knew the true story, until more than two dozen shareholder suits were filed against the net worth sweep, beginning with Perry Capital v. Treasury and FHFA in July of 2013.

The amicus curiae brief I submitted for Perry Capital in July of 2015 summarized the facts that were coming to light in these cases. I noted that both Fannie and Freddie had been in compliance with their capital requirements when Paulson asked their boards to acquiesce to his conservatorship request, and that more than all of their $187 billion in senior preferred stock (which Treasury had made repayable only with its permission) was the result of over $300 billion in noncash expenses booked by FHFA as conservator that either were temporary, advanced from future periods, or based on estimates. And I pointed out that Treasury and FHFA had imposed the net worth sweep just before the majority of those noncash expenses reversed and came back into income ($158 billion in 18 months), so that the resulting revenues went to Treasury, rather than enabling Fannie and Freddie to rebuild their capital. (For those interested in the full set of facts about the conservatorships and the net worth sweep, I recommend my Supreme Court amicus written for Collins v. Yellen.)

In July 2017, the judge in another case against the net worth sweep, Fairholme Funds v. The United States, in the Court of Federal Claims, released 33 documents produced in discovery that made clear that Treasury was not being truthful in its public explanation for the sweep, which was that it was done to save the companies from a “death spiral” of borrowing to pay the dividends on their senior preferred. Not only did these documents reveal that Treasury and FHFA were fully aware that Fannie and Freddie were about to enter “golden years of earnings” just as the sweep was being imposed, there also were memos among Treasury staff making blatant admissions such as, “By taking all of their profits going forward, we are making clear that the GSEs will not ever be allowed to return to profitable entities at the center of our housing finance system” [emphasis in original]. Finally, and more recently, in August 2023, a jury hearing a remand of Perry Capital (now Fairholme Funds v. FHFA) in the U. S. District Court for the District of Columbia found that FHFA “wrongly amended” the Senior Preferred Stock Purchase Agreements when it agreed with Treasury to impose the net worth sweep, and awarded plaintiffs damages plus interest totaling $831 million to date (to be paid by the companies, which have accrued their respective portions).

As a hedge fund manager, Treasury Secretary-designate Bessent should be aware of the plaintiffs’ (correct) version of the Fannie and Freddie story, and if he is not there will be people with whom he is close who can tell him. Knowing the facts should make Bessent more likely to concede that Treasury’s $193.4 billion in senior preferred stock in the companies is fully repaid (as it has been), and to agree that it should be cancelled, along with Treasury’s liquidation preference ($341.0 billion at December 31, 2024, and growing each quarter). Yet should he insist that payments made to Treasury under the net worth sweep are not repayments of the senior preferred—and that the companies should pay Treasury again by having its senior preferred converted to common stock—he at least will be cognizant that this stance will make the recapitalization of Fannie and Freddie much more challenging, because their investors will know that they are not being treated fairly.

Deeming Fannie and Freddie’s senior preferred to have been repaid, and cancelling it and the liquidation preference, will put the companies firmly on the path towards release. But to get to that release point more quickly—and to deliver on the Trump campaign’s pledge to reduce the cost of homeownership for ordinary Americans—Treasury and FHFA also must undo the damage to Fannie and Freddie’s credit guaranty business caused by the punitive and unjustified Enterprise Regulatory Capital Framework (ERCF) imposed by former FHFA Director Calabria. New information about Fannie and Freddie’s risk, and the “Calabria capital standard,” also has become available over the past eight years, and that should make tackling and resolving this issue easier for Bessent than it proved to have been for Mnuchin.

Most important is Fannie and Freddie’s continued improvement in their annual Dodd-Frank stress tests. In the last test made available before Mnuchin was appointed Secretary, Fannie required initial capital of 79 basis points to survive a stylized 25 percent decline in home prices, while Freddie required 156 basis points. For the test run in 2020, when Calabria put out his ERCF for comment, Fannie required no capital to survive a 28 percent drop in home prices, while Freddie required 31 basis points. Since then, neither company has required any initial capital to survive their Dodd-Frank stress tests in 2021, 2022, or 2023, and the 2023 test subjected them to a 38 percent decline in home prices. (Curiously, FHFA delayed releasing the results of the 2024 stress tests beyond its August 15 deadline, “so that the Enterprises may provide additional supporting information and analysis of the scenarios, that the Director of FHFA may deem necessary,” but since the 36 percent home price drop in the 2024 test was slightly less than in 2023, it’s safe to assume the companies required no initial capital to pass the 2024 test either.) In sharp contrast, the average risk-based capital requirement for Fannie and Freddie of the Calabria standard—purportedly calibrated to a lesser degree of stress than the Dodd-Frank test—was 4.27 percent at September 30, 2024.

Why is the Calabria capital requirement so much higher? Because it’s purely arbitrary, and not based on risk at all. Rather than create a true risk-based capital requirement for Fannie and Freddie and then set a minimum capital requirement that was lower, Calabria did the opposite. He began by setting a “bank-like” minimum capital requirement of 4.0 percent for the companies (despite the fact that they have no business in common with banks), then used three contrivances—not considering guaranty fees in the risk-based capital stress test as absorbing credit losses, artificially increasing capital on all loans though add-ons, buffers and cushions, and subjecting low-risk loans to a minimum risk weight—to engineer a result for the required amount of Fannie and Freddie’s “risk-based” capital that was greater than his arbitrary minimum of 4.0 percent. (A much more comprehensive discussion of this topic can be found in the September 2021 post Capital Fact and Fiction.)

The impact of this gross overcapitalization has been severe. Fannie has been most affected by it, because the ERCF imposes a graduated capital surcharge for financing more than 5 percent of outstanding single-family mortgages (a “stability capital buffer”), and Fannie is larger. Since the ERCF took effect in the first quarter of 2022, its stability capital buffer has averaged 30 basis points more than Freddie’s (at September 30, 2024 it was 111 basis points of Fannie’s total assets).

A comparison of selected financial data for Fannie between the five years before the ERCF took effect (2017-2021) and after is telling. In the five years prior to the ERCF, Fannie’s guaranty fee on new single-family business averaged 46.5 basis points (not including the 10 basis points it has to charge and remit to Treasury); because of the ERCF that average fee has steadily risen to 54.1 basis points in the third quarter of 2024. We saw in the mid-2010s that when Fannie’s average guaranty fee on new business exceeded 50 basis points, the growth in its single-family business stalled out. The same is happening now. After growing by 3.0 percent in 2022, Fannie’s single-family book shrunk slightly (by 0.1 percent) in 2023, and it has continued to shrink in the first three quarters of this year. As a consequence, while Fannie financed 27.8 percent of outstanding single-family mortgages at December 31, 2021, it financed just 26.1 percent as of June 30 this year (the latest date for which totals on outstanding single-family mortgages are available).

The impact of Fannie’s pricing also is evident in securitization shares. During 2017-2021, Fannie issued an average 39 percent of all new single-family MBS; Freddie and Ginnie Mae each issued 29 percent, and the other 3 percent were issues of PLS. But in the third quarter of 2024 Ginnie Mae was the leading issuer of single-family MBS, at 37 percent; Freddie was second at 28 percent, Fannie third at 27 percent, and the PLS share had risen to 8 percent.

Less evident, but more dramatic, has been the sharp drop in Fannie’s credit guarantees to borrowers with less-than-perfect credit (who typically have lower incomes). Here the relevant base of comparison is pre-conservatorship, and the last five years when Fannie had a “normal” profile of new business acquisitions—before underwriting standards were distorted by originations destined for private-label securitization—which was 2000-2004 (also my last five years as Fannie’s CFO). During that period, the average credit score of all single-family loans Fannie purchased or guaranteed was 715, and 36 percent of its business had a credit score under 700. By comparison, during the first nine months of 2024 Fannie’s average credit score on new business was 759, and a mere 10 percent of that business had a credit score under 700. That is a plunge of over 70 percent in what are predominately affordable housing loans. This, too, is the result of pricing, particularly the feature of the ERCF that does not consider guaranty fees to absorb losses. Because of that, the credit “risk weight” of a loan with a 90 percent loan-to value ratio and a credit score of 660 results in required capital of 945 basis points. And when you add in the additional percentages for management and operations risk, and the stress and stability capital buffers, Fannie’s total required capital on a 90 LTV, 660 credit score loan is 11.50 percent, requiring the company to charge a guaranty fee of 125 basis points to earn a return on capital comparable to what it’s earned on its average credit guaranty portfolio so far in 2024. That’s preposterous.

None of these trends are going to improve as long as the ERCF remains in effect. And what has been happening with Fannie also is reflected in national housing trends. Earlier this month the Washington Post published an article that reported, “Between July 2023 and June 2024 the share of first-time home buyers in the market was only 24 percent — a historic low.” It also said, “The share of home buyers paying all cash reached 33 percent through August this year, according to data from Redfin — one of the highest rates since the years following the Great Recession,” and added, “As cash purchases have become more common, the median age of home buyers…now stands at 56 years old,” compared with 39 years old in 2008 (when Fannie and Freddie were put into conservatorship). The high all-cash share of homebuyers, and their increased average age, are flip sides of mortgage costs that are unaffordable to younger potential homebuyers with decent but not great credit. This is a real problem, and getting Fannie and Freddie out of conservatorship with capital requirements based on economics rather than ideology would be a real solution, which the second Trump administration could take credit for.

What prevented Treasury Secretary Mnuchin and FHFA Director Calabria from delivering on Mnuchin’s November 2016 pledge to get Fannie and Freddie out of government control was the inability of the former to get comfortable with ending (not just suspending) the net worth sweep and eliminating Treasury’s senior preferred stock and liquidation preference in the companies, and the intransigence of the latter in making the release process much more difficult by insisting on nearly doubling their capital requirements at the same time as their credit risks were falling and their revenues soaring (as reflected in the results of their Dodd-Frank stress tests). The lessons from this failure, plus a fresh face at Treasury, should ensure that these mistakes aren’t repeated in “Release 2.0.”

Something else that won’t happen with Bessent as Treasury Secretary is “privatization” as defined by the Heritage Foundation in Project 2025. For most people, privatization means the return of Fannie and Freddie to shareholder ownership. But the Heritage Foundation’s definition of privatization is stripping Fannie and Freddie of all of the federal attributes in their charters, while leaving their business restrictions intact. The companies would not survive in that state, as the Heritage Foundation implicitly admits with its recommendation that, “Fannie Mae and Freddie Mac (both GSEs) must be wound down in an orderly manner [and] the Common Securitization Platform should be privatized and broadly available.” In other words, run off $7.3 trillion in Fannie and Freddie’s single- and multifamily mortgages and hope they can be re-issued as private-label securities. That is a disastrous prescription by academic theoreticians with no market experience, and Bessent will treat it as such.

More likely, in my view, would be for Bessent to arrive at a strategy for the release of Fannie and Freddie through an analytical process similar to what I outlined in my September 2023 post, An Easy Way Out:

“As Treasury evaluates ending the net worth sweep and allowing Fannie and Freddie to exit conservatorship, it will need to determine which of its claims on them [its senior preferred, liquidation preference, and warrants] have the most value. And that will not be hard. To get value out of its $120.8 billion of senior preferred stock in Fannie and $72.6 billion of senior preferred in Freddie, Treasury will have to convert them into each company’s common stock. Yet the very act of doing so will reinforce investors’ strong views of unfair treatment. They know Fannie and Freddie have repaid their senior preferred, with dividends; it’s just that Treasury has used its non-repayment provision as a reason not to count net worth sweep remittances as repayments. Treasury’s insisting that its senior preferred be converted to common would be requiring the companies to repay their senior preferred twice. If it does, how many investors would choose to buy Fannie or Freddie common stock again—including the stock Treasury would need to sell to get value from converting its senior preferred—and how much would they be willing to pay for it?

Now consider the alternative: making Treasury’s warrants for 79.9 percent of Fannie and Freddie’s existing common stock more valuable by making the companies more valuable. Here, Treasury would work with FHFA and the administration’s senior economic team to negotiate a recapitalization and release agreement that includes retroactive cancellation of the non-repayment provision of the senior preferred and a recasting of the companies’ remittances under the net worth sweep as repayments of the senior preferred stock (which would pay all of it off for both). Fannie and Freddie, in return, would agree to accept utility-like return targets on their credit guaranty business, benefitting homebuyers. Then, for its part, the administration would acknowledge the criticisms made by commenters on FHFA’s request for input on Fannie and Freddie’s capital and pricing, and strongly encourage (or require) FHFA to remove the excess and unwarranted conservatism in the ERCF, to have it more closely reflect the true risks of Fannie and Freddie’s business.”

An Easy Way Out also suggests a “quick fix” to the ERCF that would not require a full re-working of the rule immediately: “to drop the ‘prescribed leverage buffer’ Calabria added to the 2.5 percent minimum capital requirement FHFA set for the companies in its 2018 capital standard, and then remove enough of the non-risk-based minimums and buffers in the ERCF’s risk-based component to reduce it to below the 2.5 percent minimum, which would become the companies’ binding capital requirement for the foreseeable future.” In conjunction with that, of course, Treasury and FHFA would cancel or replace the January 14, 2021 letter agreement between Mnuchin and Calabria setting 3.0 percent CET1 capital as the threshold for ending the companies’ conservatorships.

Deeming Fannie and Freddie’s senior preferred to have been repaid and canceling the net worth sweep and the liquidation preference, and giving the companies a true risk-based capital standard and a reasonable minimum capital percentage, would be a “win” for all parties. The biggest winners would be the millions of low- and moderate-income Americans who once again would have a large-scale source of low-cost mortgage credit to help them achieve their dream of homeownership. But not far behind would be Treasury, whose stakes in Fannie and Freddie would become a great deal more valuable were the companies to be treated fairly, returned to private management, and structured to succeed.

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Some Simple Facts
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Response to FHFA Pricing RFI
Comment on ERCF Rule Amendments
A Six-Year Retrospective
Comment on FHFA Capital Re-proposal
A Three-Year Retrospective
Comment on FHFA Capital Proposal
Response to FHFA on Credit Risk Transfers
Fixing What Works
Thoughts on Delaware Amicus Curiae Brief
Argument from Perry Capital Amicus Curiae brief
Treasury, the Conservatorships, and Mortgage Reform
FHFA guaranty fee questions
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Response to FHFA Pricing RFI Comment on ERCF Rule Amendments A Six-Year Retrospective Comment on FHFA Capital Re-proposal A Three-Year Retrospective Comment on FHFA Capital Proposal Response to FHFA on Credit Risk Transfers Fixing What Works Thoughts on Delaware Amicus Curiae Brief Argument from Perry Capital Amicus Curiae brief Treasury, the Conservatorships, and Mortgage Reform FHFA guaranty fee questions
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JSmith5 JSmith5 12 hours ago
No, this is false. FnF did NOT buy toxic mortgages after conservatorship started

That's fine - I can live with that. I like Tim Howard's latest blog which he posted today.

Nats
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MRJ25 MRJ25 13 hours ago
It shure was a wild finish today. Wazzup?
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ron_66271 ron_66271 13 hours ago
The Whales Have Been Filed.

That is why we had the second dip as buying stopped temporarily.



Ron
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skeptic7 skeptic7 13 hours ago
My next question would have been:
"Cool. Why didn't you do it then?"
#crickets.
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Viking61 Viking61 13 hours ago
It’s time for Freddie to blow the top off of this thing!! More earnings per share than Fannie, half the shares outstanding and the Freddie commons are included in the Lamberth shareholders 8-0 jury victory!! GLTA!!!
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Viking61 Viking61 13 hours ago
Lamberth, anyone??
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mrfence mrfence 14 hours ago
If FHFA director pick announcement is being timed for maximum influence, Tuesday morning is the dead center target.
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Kimbrown Kimbrown 14 hours ago
It is not $3.5, it will be $35.
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Viking61 Viking61 14 hours ago
If we’re looking at a V shaped recovery, tomorrow could be a huge day!!! That graph is picture perfect!!
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mrfence mrfence 14 hours ago
Name them Tweek.
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Dabeav Dabeav 14 hours ago
Post market has them up.
👍️ 1 🙄 1
JOoa0ky JOoa0ky 14 hours ago
Not going to happen. $3.50 wall is in place.
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Clark6290 Clark6290 14 hours ago
Level II would be great if my internet worked. I certainly wouldn't sit and watch it all day though
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Guido2 Guido2 14 hours ago
https://x.com/GuidoPerei/status/1866221053049258213
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Kimbrown Kimbrown 14 hours ago
Stop the gimmick of dumping and pumping. Shareholders are long term, who will not follow you. Get the FNMA and FMCC to $8. They will be around $25-35 at release.
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trunkmonk trunkmonk 14 hours ago
seems the How Not To Crew shows up everyday and says rule of law means nothing, this all started after they completely failed in SCOTUS with their Laser focus greed. Us GSE shareholders appreciate anyone who believes in Rule of Law. maybe MC can do another 180 and push for exit, without all the illegal dilution.
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navycmdr navycmdr 14 hours ago
Level II acting crazy -

Freddie sometime higher than Fannie

Rollercoaster ride that is finishing up strong ...
👍️ 3 🖐️ 1 🚬 1
mrfence mrfence 14 hours ago
How much Meth are you on right now?
👍️ 1 😂 1 🙉 1 🫨 1
mrfence mrfence 14 hours ago
.
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PennMilitia PennMilitia 14 hours ago
kthomp19 works for the GOVT
👍️ 2 💯 3
mrfence mrfence 14 hours ago
Ooops, upside your head

👍️0
kthomp19 kthomp19 14 hours ago
No one is going to buy a company that can be nationalized at the drop of a hat to be forced to buy shitty loans from every other bagholder holding toxic mortgages.

The fact that all of the outstanding common shares are currently owned by someone proves this wrong.

If new investors would be stupid to buy post-dilution common shares, whoever owns common shares right now is even more stupid.

If not no one will give a fuck about buying like right this moment.

You own common shares yourself, proving this statement wrong too.

There is likely more institutional interest in preferred though based on price action.

I agree.
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kthomp19 kthomp19 14 hours ago
New capital isn’t going to take the risk of this happening again if they see previous shareholders hosed a final time after 16 years.

You mean new investors are going to look at the following:

1) strong-arming the BODs into consenting to conservatorship
2) extremely punitive terms in the original SPSPAs
3) the freaking NWS
4) defending every shareholder-brought lawsuit tooth and nail
5) liquidation preference ratchet in the last few letter agreements

and be okay with putting their money in, but a senior-to-common exchange would be the final straw? That makes no sense whatsoever.

If new investors won't ever buy newly-issued common shares due to past government mistreatment, then FnF will be stuck in conservatorship forever because Treasury will have no incentive to let them out.

And if new investors will buy, a senior-to-common exchange won't faze them.

But if they treat current holders fair and shareholders whoop it up a little it would create a far better investing environment and elicit more interest than if we all are screaming this is fing BS.

The more money that legacy common holders get, the less money new investors get. The pie is fixed. Why would new investors give away money to legacy common when they don't have to?
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kthomp19 kthomp19 14 hours ago
Howard is about to lose his shirt thinking that commons need to be treated fairly for outside capital to invest...

Not personally. He sold his common shares a long time ago.

Still, he's wrong on that count and others who do own legacy commons and agree with his flawed thinking are certainly at risk of losing substantial amounts.

These two parties' interests are literally on opposite sides of the negotiating table.

That's the huge flaw in Ackman's thesis. He wants Treasury to exercise the warrants because in his mind it would align Treasury's interests with legacy common holders'. A senior-to-common exchange inverts that and gives Treasury a reason to grab as much of the pie as they can, thus leaving as little as possible behind for legacy common.

The fact that Ackman wants the warrants exercised also illustrates the backward thinking of some common shareholders, the ones who take Ackman's outdated $23-47 price target from 10 years ago and then argue that the warrants should be cancelled rather than exercised, leading to a higher common share price. They start with a high share price and start arguing for the steps it would take to get there, rather than looking at FHFA and Treasury's actual incentives first and estimating a share price from there.
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