FNMAS - Fannie mae /preferred stock series S

[morningstar]

The alternative would seem to be:

 

Lift the securitization apparatus out of the GSEs and recreate it as a public utility (this has already begun via the new CSS JV between the two GSEs), opening it up to new private capital players to issue RMBS. Presumably, people stand ready to invest tens of billions in such new private players, as Fairholme has indicated.

 

Meanwhile, gov't continues to collect all profits from Fannie/Freddie as they wind down and their balance sheet goes toward zero, assuming no court ruling to the contrary. At some point, the worthless/empty shells are turned back over to existing shareholders.

[valuecfa]

The alternative would seem to be:

 

Lift the securitization apparatus out of the GSEs and recreate it as a public utility (this has already begun via the new CSS JV between the two GSEs), opening it up to new private capital players to issue RMBS. Presumably, people stand ready to invest tens of billions in such new private players, as Fairholme has indicated.

 

Meanwhile, gov't continues to collect all profits from Fannie/Freddie as they wind down and their balance sheet goes toward zero, assuming no court ruling to the contrary. At some point, the worthless/empty shells are turned back over to existing shareholders.

 

The JV is a fully owned subsidiary of Fannie and Freddie shareholders

[jrallen81]

unless congress says it isn't!

[Mephistopheles]

Part of Berkowitz's plan is to convert preferred to common.  He also mentions the deal he is presenting could be completed by mid-2014.  Wow!

 

Berkowitz letter attached.

 

Bruce still holding these? Guru focus shows that he sold out FNMAx positions, but  don't know for sure... i have limited access.

 

He doesn't have to report his holdings since they are not listed on an exchange. Whatever he used to report was voluntary, and then he stopped.

 

Having said that, whether or not he has sold or increased his position is impossible to know now. He has access to information that we don't in the Discovery. So he can use information, or lack thereof, to his advantage.

[deadspace]

The alternative would seem to be:

 

Lift the securitization apparatus out of the GSEs and recreate it as a public utility (this has already begun via the new CSS JV between the two GSEs), opening it up to new private capital players to issue RMBS. Presumably, people stand ready to invest tens of billions in such new private players, as Fairholme has indicated.

 

Meanwhile, gov't continues to collect all profits from Fannie/Freddie as they wind down and their balance sheet goes toward zero, assuming no court ruling to the contrary. At some point, the worthless/empty shells are turned back over to existing shareholders.

 

The GSEs could still have a future even without the government charter.  Congress needs to decide whether they wish to take away the charter.  That would be part of the "wind down".  But this "wind down" language has been used by treasury a decade ago to describe the restructuring of Sallie Mae and their future without the charter turned out quite good.  The charter has positives and negatives as was the experience of Sallie Mae. 

 

I just don't see in this case how they preserve the 30 year mortgage without the charter or some sort of government guarantee built into the system

 

 

http://www.treasury.gov/about/organizational-structure/offices/Documents/SallieMaePrivatizationReport.pdf

 

 

 

[nodnub]

Is it possible that the 30 year mortgage disappears at some point in the near future?  (I mean, no new 30yr mortgages)

[orthopa]

Is it possible that the 30 year mortgage disappears at some point in the near future?  (I mean, no new 30yr mortgages)

 

The only way that would happen would be lengthen to 40 or longer mortgages. Most American prize the ability to own their own home but lack the ability of discipline to save enough for even a 20% downpayment. If only 15 year mortgages were allowed I bet it would crash the housing market price wise as very little would be able to afford the payments. Thus prices will drop.

 

The 30 year mortgage is a very "American" institution and allows so much home ownership. Its not going away, if it does say bye bye to house prices and the housing market.

[Luke 532]

Sen. Rand Paul Introduces the FAIR Act

http://www.paul.senate.gov/?p=press_release&id=1279

 

Rep. Pearce: Fannie and Freddie To Exit Conservatorship/ The Elephant In The Room Addresses The Elephant In The Room.

http://timhoward717.com/2015/01/27/rep-pearce-fannie-and-freddie-to-exit-conservatorship-the-elephant-in-the-room-addresses-the-elephant-in-the-room/

[Guest Schwab711]

Is it possible that the 30 year mortgage disappears at some point in the near future?  (I mean, no new 30yr mortgages)

 

The only way that would happen would be lengthen to 40 or longer mortgages. Most American prize the ability to own their own home but lack the ability of discipline to save enough for even a 20% downpayment. If only 15 year mortgages were allowed I bet it would crash the housing market price wise as very little would be able to afford the payments. Thus prices will drop.

 

The 30 year mortgage is a very "American" institution and allows so much home ownership. Its not going away, if it does say bye bye to house prices and the housing market.

 

I would be careful with such negative generalizations about America. They are popular to repeat but the demand for 15 year mortgages is at all time highs since 2008. Buying homes in cash is also at an all-time high (and thus, 30-year mortgages are now less than 50% of all mortgages). There are other articles I can't find now but America is truly in great shape (or at least much stronger than any other nation in the world). If anything the term length would probably decrease. There has been a push recently to change the standard mortgage to 15/20 years because people stay in their homes for less time than in the past and banks have now seen the dangers of re-investment risk with [R]MBS.

 

http://usatoday30.usatoday.com/money/perfi/columnist/block/2011-08-15-mortgage-tips_n.htm

[cubsfan]

Interesting - I can't imagine how the housing market would not crash if the 30 year were eliminated.

At least, I hope I can dump my house before they get rid of it.

[merkhet]

Perhaps we should keep all the information in one thread.

 

http://www.cornerofberkshireandfairfax.ca/forum/general-discussion/fnma-and-fmcc-preferreds-in-search-of-the-elusive-10-bagger/msg208814/#msg208814

 

The FAIR Act is interesting, but I think it's directed more towards police and asset forfeiture than the Fannie & Freddie cases.

[orthopa]

Is it possible that the 30 year mortgage disappears at some point in the near future?  (I mean, no new 30yr mortgages)

 

The only way that would happen would be lengthen to 40 or longer mortgages. Most American prize the ability to own their own home but lack the ability of discipline to save enough for even a 20% downpayment. If only 15 year mortgages were allowed I bet it would crash the housing market price wise as very little would be able to afford the payments. Thus prices will drop.

 

The 30 year mortgage is a very "American" institution and allows so much home ownership. Its not going away, if it does say bye bye to house prices and the housing market.

 

I would be careful with such negative generalizations about America. They are popular to repeat but the demand for 15 year mortgages is at all time highs since 2008. Buying homes in cash is also at an all-time high (and thus, 30-year mortgages are now less than 50% of all mortgages). There are other articles I can't find now but America is truly in great shape (or at least much stronger than any other nation in the world). If anything the term length would probably decrease. There has been a push recently to change the standard mortgage to 15/20 years because people stay in their homes for less time than in the past and banks have now seen the dangers of re-investment risk with [R]MBS.

 

http://usatoday30.usatoday.com/money/perfi/columnist/block/2011-08-15-mortgage-tips_n.htm

 

15 year mortgages are at all time highs BC people are refinancing from 30 year mortgages, not to mention a 50% cut in housing prices in some areas.  I cant believe it is because all of a sudden Americans are better capital allocaters as a whole. The savings rate was negative up to the housing crash and now what, 4%? Compare that to other countries...americans need long dated mortgages.

 

People buying homes in cash are investors, not your family making less then 100k a year which is a huge portion of america.  How long do you think it would take a family of 4 that brought in 100k a year to save say 175k cash for a house? Forever, hell the avg 401k balance in america is like 50k and that is non taxed money.

 

30 year mortgages and the mortgage interest tax write off (even though many dont pass the standard deduction in interest/taxes)are needed to subsidize american housing.

 

Im American as anyone but your giving the general population too much credit. America is still paycheck to paycheck 6 years into the recovery so I cant image too many people dying to up their mortgage payment by 40%.

[mttddd]

http://toddwschneider.com/posts/mortgages-are-about-math-open-source-loan-level-analysis-of-fannie-and-freddie/

 

interesting analysis of Fannie and Freddie loans