2latefortears
21 minutes ago
Ending the Fannie/Freddie conservatorships
Exiting conservatorship with fairness and competition at the forefront
December 6, 2024, 7:00 am By Scott Olson and Rob Zimmer
Near the end of the first Trump Administration, the Federal Housing Finance Agency (FHFA) finalized a capital rule for Fannie Mae and Freddie Mac. A December 2020 HousingWire article reported that this was part of an overall effort by FHFA to fulfill the statutory mandate of responsibly ending the Enterprises’ conservatorships — with Treasury Secretary Mnuchin testifying before Congress that the GSEs could be released from conservatorship once they accumulated significant capital.
With a second Trump Administration imminent, speculation is growing that the GSEs could soon exit conservatorship. At a September CHLA Roundtable, former FHFA Director Mark Calabria said that there is “maybe a 70% chance” this will be accomplished by 2027, adding that “You can get them out. It’s all feasible, doable.” [See HousingWire story on the CHLA Roundtable].
Is taking Fannie and Freddie out of conservatorship a good idea? CHLA has for many years thought so. But it must be done the right way. A framework should be established for Fannie and Freddie to operate as a true utility – balancing their critical mission of affordable homeownership and rental housing loans with financial and operational guardrails, so they don’t go off the cliff again like they did in 2008.
Equally important, there must be substantive small lender protections to protect community independent mortgage banks (IMBs) and community banks – to ensure that a level playing field is created. This is essential for rigorous competition, which benefits borrowers through lower rates and more choices.
Before people sound the alarm about Fannie and Freddie being returned to the private sector, it is critical to understand that significant financial reforms have taken place since 2008.
The 2008 HERA legislation created a strong regulator — FHFA — with responsibilities to ensure that the GSEs operate in a financially sound manner. In turn, as noted, FHFA adopted strong capital requirements for Fannie and Freddie, and they have already accumulated $146.6 billion in combined capital.
Interest rate risk has significantly been taken out of the equation, through strict caps on the volume of loans GSEs can hold in portfolio. The GSEs have been engaging in credit risk transfers, which both shift credit risk to other players and foster market discipline.
Post conservatorship, CHLA (and many others) believe the GSEs should operate under a true utility model, to rein in the types of actions that led to the conservatorship in the first place.
FHFA should not set pricing for guarantee fees — but it should prevent Fannie and Freddie from using their GSE status to maximize profits, instead keeping fees at levels commensurate with a fair return on capital. FHFA should not allow the GSEs to pursue risky loans like they did pre-conservatorship with no doc, no income loans. FHFA should not allow the GSEs to engage in activities unrelated to their core affordable housing mission of purchasing and bread and butter single family and multi-family mortgage loans.
At the same time, Fannie and Freddie should fully and vigorously pursue their affordable housing mission. CHLA has concerns here, because, for example, FHFA imposed arbitrary volume caps in 2020 on individual lenders originating GSE single family loans for investor properties and second homes.
CHLA would oppose re-imposition of these types of caps — or any other actions that arbitrarily reduce the GSEs’ footprint. Banks have broadly retreated from portfolio mortgage lending since 2008 and the private label securitization (PLS) market for single family loans is moribund. Therefore, it would be folly to assume, without evidence, that the “private sector” will step in if Fannie and Freddie retrench.
The second imperative is to ensure that smaller lenders are protected, that there is a level playing field.
In the years leading up to 2008, Fannie and Freddie offered sweetheart pricing deals to mega-lenders like Countrywide and WAMU. We saw how that turned out. So FHFA during the first Trump Administration commendably adopted a conservatorship policy of mandating G Fee parity.
G Fee parity — no pricing discounts based on lender size or lender GSE volume — needs to be an explicit policy post-conservatorship. This should be broadly defined to avoid loopholes, like price discrimination with regard to buy up/buy down grids or any use of proxies for volume discounts.
CHLA also believes private mortgage insurers should not be able to price discriminate based on the size or volume of the lender, since mortgage insurance is an essential component of lower down payment GSE loans. The same should be true for other essential third party services for GSE loans (e.g., FICO’s 2023 pricing scheme to provide significantly lower pricing to a select group of 50 lenders they picked).
Second, there must be an ongoing commitment by both Fannie and Freddie to maintaining a robust cash window, with full access to all approved seller-servicers on a non-discriminatory basis. The cash window is critical to creating robust competition. It has worked very well during the conservatorship.
Third, Wall Street Banks should not be given new GSE charters. We know Wall Street banks desire a GSE charter (back-stopped by taxpayers), so they can gain an unfair competitive advantage — solely for their own bank customers. This is antithetical to the principles of competition and fair mortgage markets.
The final issue is Congress’ role in taking the GSEs out of conservatorship. As CHLA has long pointed out, the 2008 HERA statute gives FHFA and the Treasury Department the authority to accomplish this. Therefore, while Congress is of course welcome to participate in the process, it is not essential.
CHLA’s concern about a conservatorship exit through legislation is that Wall Street Banks, with their lobbying and PAC powers, will exert unfair influence over the final legislation. We witnessed that a decade ago with the last major Congressional GSE reform. Fortunately, a coalition of small lenders, homebuilders, and consumer groups beat back efforts to give the big banks an unfair advantage.
Put simply, the overriding principle governing taking Fannie and Freddie out of conservatorship must be a level playing field for all lenders, which leads to robust competition and maximum borrower choices.
Fasten your seatbelts. It could be an interesting ride.
Scott Olson is the Executive Director and Rob Zimmer is the Director of External Affairs for the Community Home Lenders of America (CHLA), which represents small and mid-sized IMBs.
This column does not necessarily reflect the opinion of HousingWire’s editorial department and its owners.
To contact the editor responsible for this piece: zeb@hwmedia.com.
https://www.housingwire.com/articles/ending-the-fannie-freddie-conservatorships/
mrfence
8 hours ago
You're FIRED!
Directors elected to the board are: Priscilla Almodovar, Amy E. Alving, Christopher J. Brummer, Renée Lewis Glover, Michael J. Heid, Simon Johnson, Karin J. Kimbrough, Diane N. Lye, Diane C. Nordin, Chetlur S. Ragavan, Manuel Sánchez Rodríguez, Michael A. Seelig, and Michael A. Seelig.
from Imgflip Meme Generator
mrfence
12 hours ago
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): December 2, 2024
Federal National Mortgage Association
(Exact name of registrant as specified in its charter)
Fannie Mae
Federally chartered corporation 0-50231 52-0883107 1100 15th Street, NW 800 232-6643
Washington, DC 20005
(State or other jurisdiction
of incorporation) (Commission
File Number) (IRS Employer
Identification No.) (Address of principal executive offices, including zip code) (Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
? Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
? Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
? Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
? Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Trading Symbol(s) Name of each exchange on which registered
None N/A N/A
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ?
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ?
Item 5.07 Submission of Matters to a Vote of Security Holders.
Election of Directors
Upon its appointment as conservator of Fannie Mae in September 2008, the Federal Housing Finance Agency (“FHFA”) succeeded to all rights, titles, powers and privileges of Fannie Mae, and of any stockholder, officer or director of Fannie Mae with respect to Fannie Mae and its assets, including the stockholders’ rights to elect our directors.
Since FHFA reconstituted our Board of Directors in 2008, subsequent vacancies have been filled by the Board, subject to review by the conservator. Board members who were appointed for the first time in 2021 or thereafter have been serving three-year terms while we are in conservatorship.
We recently implemented an annual election schedule for our Board of Directors, and FHFA executed a written stockholder consent, dated December 2, 2024, electing all of the current members of Fannie Mae’s Board of Directors:
•Priscilla Almodovar
•Diane N. Lye
•Amy E. Alving
•Diane C. Nordin
•Christopher J. Brummer
•Chetlur S. Ragavan
•Renée Lewis Glover
•Manuel Sánchez Rodríguez
•Michael J. Heid
•Michael A. Seelig
•Simon Johnson
•Scott D. Stowell
•Karin J. Kimbrough
Each director will serve for a term that ends on the date of our next annual meeting of shareholders, or when the conservator next elects our directors by written consent, and will hold office until their successor is chosen and qualified, or until the director’s earlier resignation, retirement, removal, or death. As Chief Executive Officer, Ms. Almodovar’s service on the Board ceases at the termination of her employment as Chief Executive Officer unless otherwise requested by the Board.
1
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
FEDERAL NATIONAL MORTGAGE ASSOCIATION
By /s/ Thomas L. Klein
Thomas L. Klein
Enterprise Deputy General Counsel—Vice President
Date: December 5, 2024
2
mrfence
12 hours ago
It's a list of all the people we're going to fire next year.
Fannie Mae shifts to annual election of directors
Dec. 05, 2024 4:44 PM ETFederal National Mortgage Association (FNMA) StockBy: Liz Kiesche, SA News Editor2 Comments
Fannie Mae (OTCQB:FNMA) recently implemented an annual election schedule for its board, and its conservator, the Federal Housing Finance Agency, executed written stockholder consent, electing all the company's current board members, it said Thursday.
Since 2021, board members appointed for the first time to the board served three-year terms.
Directors elected to the board are: Priscilla Almodovar, Amy E. Alving, Christopher J. Brummer, Renée Lewis Glover, Michael J. Heid, Simon Johnson, Karin J. Kimbrough, Diane N. Lye, Diane C. Nordin, Chetlur S. Ragavan, Manuel Sánchez Rodríguez, Michael A. Seelig, and Michael A. Seelig.
Each director will serve for a term that ends on the date of our next annual meeting of shareholders, or when the conservator next elects our directors by written consent, Fannie Mae
Lite
14 hours ago
I like a couple of parts to this press ‘release’ - a ‘tell-tell’ sign?
Fannie Mae (OTCQB:FNMA) recently implemented an annual election schedule for its board, and its conservator, the Federal Housing Finance Agency, executed written stockholder consent, electing all the company's current board members, it said Thursday.
Each director will serve for a term that ends on the date of our next annual meeting of shareholders, or when the conservator next elects our directors by written consent, Fannie Mae (OTCQB:FNMA) said.
trunkmonk
17 hours ago
I know exactly who is a P holder, they smooze Cs then tell u how many Commons each P will get. its actually humorous. SPSA agreement is more sticky, its unilateral death spiral lending. the PHateFilledSnakes luv it, and try to justify the illiquidity behind it, SM and others may be in jail or charged in the end. they have to get someone just the opposite of Mnuchin, he was a snake through and through, they need a man with ethics, lets hope he is. fact is, they have already been paid back, in full with interest. No conversion or free rip off warrants (that are illegal anyway if they did) they were only insurance.
JSmith5
18 hours ago
the solution will be closer to what DJT has already espoused which would seem to be more generous that what John Paulson has stated?
FOFreddie - That's definitely the question. Although Paulson stated 90-95% he was just relating what Wall Street was kicking around - seems kind of high to me. And remember, even the warrants are an "'up to" number. But even with the warrants fully exercised, as long as they don't go too far into the seniors (if at all), most of us will do o.k.
I could be wrong, but believe that most of the folks on this board, including me, were not the same folks who were screwed over by the Government in 2008 or even 2012, but came by way of these stocks much later in the game because it was a special situation and we saw the opportunity to make better than average returns. It was a great risk/reward play when you could buy 100,000 common shares for a quarter each or preferred shares for a nickel on the dollar (not that I got in that cheap for either). But the warrants and the seniors existed at the time many of us bought and we knew what we were buying into. Yet many of these late comers are same people who complain that the Government screwed us. They didn't screw me because I bought in the post-screw period as I think most of us did. People got out their calculators and started multiplying their number of shares by $5 and said "why not $50?" then "why not $150? $350"?. Thinking closer to winning the lottery than investing in 2 solid companies. (I still can't wrap my head around MBS backed by 750 FICOs and 50% LTVs - Damn!! ) And then developing a sense of entitlement - as in hey - the Government owes me at least $xx per share because they screwed the company 16 years ago.
I am as greedy (or needy) as anyone else. But I know that the share price is limited by the warrants which I expect to be exercised. The key remains what they will do with the seniors. I think they will be cancelled, or at worst we get "senior lite".
I am just saying that, unless you bought 16 years ago, we should all do fine. Man, woman and child. You may not be jetting to the Rivera 6 times a year for vacation, and may not agree with me about the ultimate outcome, but most of us would agree that everything seems to be falling in place now for release which I think has favorably impacted the price of our stock. Again, I could be wrong on all of this as I am one of the folks that confidently predicted a SC 6-3 victory and we got a 9-0 wipeout (except for the Director removal part).
Nats