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

[SnarkyPuppy]

http://www.mpamag.com/market-update/new-policy-team-for-next-phase-of-housing-finance-reform-78531.aspx

 

I do not like this news. The fact that these names are assembling a new team to deal with housing reform does not bode well. Unless Mnuchin is firm in his belief that any recapitalization should precede reform. In which case release may still not happen but equity might have a better chance to survive intact. Whatever any reform may look like.

 

I still was disappointed that so late in the game we hear again from names that are hostile to shareholders. How the fuck these people survive, then even thrive?

 

May be not so late in the game? MI would not put this team together if they didn't believe they have a chance to push forward a proposal.

 

Unless Mnuchin continues to keep a poker face on this.  I personally don't buy the fact that Mnuchin has a secret plan to help shareholders and think anyone who believes so is dealing w bias.  I don't think it's intelligent for Mnuchin to not settle w shareholders, but he may see the legal liability as a payment to be made after this administration is gone. 

 

Craig Phillips + obvious that MI must believe they have a shot here are both scary indicators.

 

With that said, corker news is directionally pointing the other way. 

[waynepolsonAtoZ]

DeMarco is NOT on the Milken Institute team?

[investorG]

http://www.mpamag.com/market-update/new-policy-team-for-next-phase-of-housing-finance-reform-78531.aspx

 

I do not like this news. The fact that these names are assembling a new team to deal with housing reform does not bode well. Unless Mnuchin is firm in his belief that any recapitalization should precede reform. In which case release may still not happen but equity might have a better chance to survive intact. Whatever any reform may look like.

 

I still was disappointed that so late in the game we hear again from names that are hostile to shareholders. How the fuck these people survive, then even thrive?

 

May be not so late in the game? MI would not put this team together if they didn't believe they have a chance to push forward a proposal.

 

Unless Mnuchin continues to keep a poker face on this.  I personally don't buy the fact that Mnuchin has a secret plan to help shareholders and think anyone who believes so is dealing w bias.  I don't think it's intelligent for Mnuchin to not settle w shareholders, but he may see the legal liability as a payment to be made after this administration is gone. 

 

Craig Phillips + obvious that MI must believe they have a shot here are both scary indicators.

 

With that said, corker news is directionally pointing the other way.

 

I don't think he is focused on helping out shareholders directly but the question is do we benefit from his plans indirectly?  I believe the combined market cap of the public common and preferred shares for the 2 companies is less than $15bn (?) and so the dollar amount requirements which lead to a fair outcome are not high relative to current market cap levels.  let's say berkowitz wanted 2/3 of par, for instance, and everyone else did too -- that's only a couple years of earnings, no biggie.

 

[SnarkyPuppy]

http://www.mpamag.com/market-update/new-policy-team-for-next-phase-of-housing-finance-reform-78531.aspx

 

I do not like this news. The fact that these names are assembling a new team to deal with housing reform does not bode well. Unless Mnuchin is firm in his belief that any recapitalization should precede reform. In which case release may still not happen but equity might have a better chance to survive intact. Whatever any reform may look like.

 

I still was disappointed that so late in the game we hear again from names that are hostile to shareholders. How the fuck these people survive, then even thrive?

 

May be not so late in the game? MI would not put this team together if they didn't believe they have a chance to push forward a proposal.

 

Unless Mnuchin continues to keep a poker face on this.  I personally don't buy the fact that Mnuchin has a secret plan to help shareholders and think anyone who believes so is dealing w bias.  I don't think it's intelligent for Mnuchin to not settle w shareholders, but he may see the legal liability as a payment to be made after this administration is gone. 

 

Craig Phillips + obvious that MI must believe they have a shot here are both scary indicators.

 

With that said, corker news is directionally pointing the other way.

 

I don't think he is focused on helping out shareholders directly but the question is do we benefit from his plans indirectly?  I believe the combined market cap of the public common and preferred shares for the 2 companies is less than $15bn (?) and so the dollar amount requirements which lead to a fair outcome are not high relative to current market cap levels.  let's say berkowitz wanted 2/3 of par, for instance, and everyone else did too -- that's only a couple years of earnings, no biggie.

 

Berkowitz will be paid.  Not sure if we will

[waynepolsonAtoZ]

Financial services roundtable. http://www.fsroundtable.org/ed-demarco-lead-fsrs-housing-policy-council/

 

[SnarkyPuppy]

Craig Phillips of @USTreasury endorses @NAFCU's advocacy on #housing reform. #NAFCUCaucus

[Luke 532]

Craig Phillips of @USTreasury endorses @NAFCU's advocacy on #housing reform. #NAFCUCaucus

 

Hmmmm....

Mark Calabria, chief economist for Vice President Mike Pence, will provide an insider view of President Donald Trump's economic agenda during a luncheon session during NAFCU's Congressional Caucus Sept. 11.

https://www.nafcu.org/News/2017_News/August/Pence_economist_Mark_Calabria_at_NAFCU_Caucus/

 

NAFCU: "The GSEs should be allowed to rebuild their capital buffers."

(see attached document)

 

Mnuchin and NAFCU Chairman of the Board, Rich Harris, earlier this morning (see attached pic).

[SnarkyPuppy]

NAFCU plan is so vague.  Sure it says they should rebuild capital today, but also contemplates significant structural reform

[Luke 532]

NAFCU plan is so vague.  Sure it says they should rebuild capital today, but also contemplates significant structural reform

 

Agreed.  For the short-term I think this bodes well for an increased likelihood of some adjustment to the sweep scheduled for later this month.

 

With that said, withholding $1B and sending the rest to Treasury would be a negative, in my opinion.  Changing payment to annual instead of quarterly would be positive, in my opinion. 

 

We'll see what happens... just about 3 weeks max to find out what will happen with the September payment.

[FreeOption]

https://www.bloomberg.com/graphics/2017-fannie-freddie-friends/

 

[Luke 532]

Chad Pergram‏Verified account @ChadPergram 11m11 minutes ago

 

Ryan says Brady told GOPers principles of tax reform to be released Sept 25. Consensus of what the Big 6 envisions

 

[investorG]

apparently craig phillips talked about bringing GSEs out of conservatorship over the longer term at the conference yesterday. 

 

To me, this is huge news, and the first update since the very early days of mnuchin about their plan.

 

 

 

 

[Guest cherzeca]

apparently craig phillips talked about bringing GSEs out of conservatorship over the longer term at the conference yesterday. 

 

To me, this is huge news, and the first update since the very early days of mnuchin about their plan.

 

@G:  source?

[Midas79]

apparently craig phillips talked about bringing GSEs out of conservatorship over the longer term at the conference yesterday. 

 

To me, this is huge news, and the first update since the very early days of mnuchin about their plan.

 

@G:  source?

 

https://www.nafcu.org/News/2017_News/September/Treasury__HUD_join_NAFCU_Caucus_to_talk_housing_finance__reg_reform/

 

"Our goal is to work with Congress [to achieve] comprehensive housing reform," he said. That overarching reform effort also needs to address bringing the government-sponsored enterprises (Fannie Mae and Freddie Mac) out of conservatorship as part of a long-term housing strategy, he said.

 

It sounds like actually bringing the GSEs out of conservatorship isn't necessarily itself a long-term goal.

[TonyG]

I agree Midas. Also, anyone care to guess why common was up 10% today? possibly based phillips comments from yesterday?

[investorG]

I agree Midas. Also, anyone care to guess why common was up 10% today? possibly based phillips comments from yesterday?

 

good guess.

 

and the business partner of Tim Rood -- who is sympathetic to us in public appearances -- got nominated for FHA job.

 

combine that with Ben 'they can get paid back but not immediately' Carson, those appear to be good supports to Mnuchin / Phillips.

 

 

[TonyG]

Think I found my answer

 

 

Sen. Brown and 5 other Sen. Dems send letter to Mnuchin asking Treasury to let Fannie/Freddie to retain capital ahead of GSE reform plan.

 

Haven't seen the letter yet

[Guest cherzeca]

Think I found my answer

 

 

Sen. Brown and 5 other Sen. Dems send letter to Mnuchin asking Treasury to let Fannie/Freddie to retain capital ahead of GSE reform plan.

 

Haven't seen the letter yet

 

Maybe another instance where trump administration will work constructively with dems

[Luke 532]

Think I found my answer

 

 

Sen. Brown and 5 other Sen. Dems send letter to Mnuchin asking Treasury to let Fannie/Freddie to retain capital ahead of GSE reform plan.

 

Haven't seen the letter yet

 

Letter: https://twitter.com/BrolinWalters/status/908091408757686272

[orthopa]

Wow all of a sudden congress (democrats) now seem to care about what all of these minority groups have to say. 9/29 is the day or day before $$$ is to be sent to treasury right? Not a coincidence.

 

Congress seems to have taken to heart that Mnuchin is not discussing building capital with Watt. I certainly though otherwise as they have had meetings correct?

 

2nd last paragraph shows that congress no where near reform happening by end of 2017.

 

Question is what happens to shareholders if FnF are building capital until congress gets its act together say 6-18 months. They combined could have 15-20B by then no? I need to refresh my memory on the possible outcomes in a building capital scenario where they are released out of conservatorship etc. I have kept my investment but haven't thought about this in a while frankly because I never thought a day like this would come. Although at first glance it appears that congress just want to buy themselves more time.

[TonyG]

if republicans get their tax reform done by year end, gses will need a lot more than just this dividend payment in capital retained

[investorG]

if republicans get their tax reform done by year end, gses will need a lot more than just this dividend payment in capital retained

 

if desired, there are technical workarounds for this situation

[investorG]

Wow all of a sudden congress (democrats) now seem to care about what all of these minority groups have to say. 9/29 is the day or day before $$$ is to be sent to treasury right? Not a coincidence.

 

Congress seems to have taken to heart that Mnuchin is not discussing building capital with Watt. I certainly though otherwise as they have had meetings correct?

 

2nd last paragraph shows that congress no where near reform happening by end of 2016.

 

Question is what happens to shareholders if FnF are building capital until congress gets its act together say 6-18 months. They combined could have 15-20B by then no? I need to refresh my memory on the possible outcomes in a building capital scenario where they are released out of conservatorship etc. I have kept my investment but haven't thought about this in a while frankly because I never thought a day like this would come. Although at first glance it appears that congress just want to buy themselves more time.

 

limbo.  we wait for the proposals and any potential action.  but from a better starting position.

 

[Midas79]

The volume and price surge seems disproportionate to the Senators' letter. We have seen those before, though the request for a reply by September 29 is new.

 

Edit: the letter might even be negative if Mnuchin was hoping to keep his plan under wraps. I don't see how he can dodge the question this time.

 

The Phillips comments are a much bigger deal imo. This is a Treasury official directly commenting that the conservatorships need to end. Recapitalization will have to precede that. For all the talk about "we do not want this construed as an intent to 'recap and release'," there sure are a lot of power players leaning towards that possibility.

[orthopa]

Based on the preferred alone the market must still see a way where FnF are allowed to retain capital, conservatorship ends and preferred still gets nothing based on todays prices at 20-30% of par.