Author Topic: FNMA and FMCC preferreds. In search of the elusive 10 bagger.  (Read 3455420 times)

Cigarbutt

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10610 on: October 13, 2018, 08:45:28 AM »
https://www.wsj.com/articles/fannie-maes-comeback-captain-reflects-on-his-tenure-1539403201?emailToken=bc619e7a2f6b0b34cd287779374a2f5ap3TaK6/u+bg0eHMjfaBeeN8L+agktGTgWeqObmrJRmkiKfMUjMTnGrCHbX0x86N6VjmyKm5sj3ZBC9cwj9bxEwUEIPi5MV660D8ne88Fzzo%3D&reflink=article_copyURL_share


WSJ: If the Trea­sury sec­re­tary comes to you and says, “Tim, what do we do with Fan­nie and Fred­die,” what ad­vice would you give him?

Mr. May­opou­los: What I’d say is that we should sep­a­rate what kind of hous­ing fi­nance sys­tem you would want to cre­ate from the two en­ti­ties that are cur­rently Fan­nie and Fred­die. The po­lit­i­cal as­pect of just talk­ing about Fan­nie and Fred­die com­pli­cates the de­bate. One of the things that we col­lec­tively as a coun­try un­der­ap-pre­ci­ate is how suc­cess­ful our hous­ing-fi­nance sys­tem re­ally is. The sys­tem we have very ef­fi­ciently at­tracts cap­i­tal to the United States and de­ploys it in a way that is re­ally the envy of a lot of other coun­tries.

The other thing I would say to the Trea­sury sec­re­tary is that while hous­ing-fi­nance re­form is im­por­tant, the real cri­sis of hous­ing isn’t hous­ing-fi­nance re­form—it’s re­ally af­ford­able hous­ing. There’s re­ally just not enough sup­ply of de­cent, af­ford­able hous­ing avail­able to most Amer­i­cans.


Hi DocSnowball,

I have followed this thread intermittently and some aspects are fascinating.
Here and now, just want to make a few comments about the bolded part above.

Context:
I've always found US public involvement in housing finance and private home ownership to be highly unusual. Opinion: This is work in progress through Congress but most of the involvement is a relic of reforms from the Great Depression and should be curtailed. The marvelling and potentially noble aspects have been mired in a growing web of moral hazard. I thought the following to be useful for historical perspective:
https://files.stlouisfed.org/files/htdocs/publications/review/94/07/Structure_Jul_Aug1994.pdf
https://www.huduser.gov/publications/pdf/us_evolution.pdf
https://www.mercatus.org/system/files/House_of_Cards_March_2012.pdf

-Comments about the bolded part of your post

The idea is to maintain cheap financing. Most of the financial backing is domestic but, since the early 2000's, a significant part of the financial backing comes from countries that show a positive current account balance and with whom trade skirmishes are forming. So, in substance, the US buys cheap goods and then recycle USD through the capital account in order to maintain cheap affordable housing. :o

Here are some numbers (not audited!) which show the percentage of the current account balance that has been "financed" through net changes in foreign holdings of agency MBS.

2004  4,3%          2009  (5,5%)      2014  3,0%
2005  11,8%        2010  (9,0%)      2015  18,2%
2006  15,1%        2011  0,1%         2016  20,7%
2007  25,9%        2012  0,8%         2017  12,8%
2008  29,8%        2013  (17,4%)

Reference:
https://www.ginniemae.gov/newsroom/publications/Documents/foreign_ownership_mbs.pdf

All I'm saying is that the unsustainable trade imbalance will/should be dealt with and that adjustments will need to be made of both side of the equations and that the outcome with agencies may have to take into account less efficient entry of foreign capital.


rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10611 on: October 14, 2018, 10:12:22 AM »
Otting may be the next FHFA director.

Not sure if he said this, it appears here, kind of confusing for me who said it.

https://www.americanbanker.com/list/regulatory-relief-manna-from-heaven-comments-of-the-week

On a look at where the housing finance system stands 10 years after the government takeover of Fannie Mae and Freddie Mac:

"Don't be gulled by those who claim there a consensus to reform the GSEs. Zandi, Parrot, Stegman, and others, with their Senate R allies--were "banking" on (pun intended) that --but LOST, when their proposal ignored the GSE's affordable housing roles causing no Senate Banking Committee support. That occurred before the FDIC this year it said was the big banks and their poorly underwritten, falsely rated, private label mortgage securities (PLS) which caused the 2008 financial debacle."

This ihub is interesting

https://investorshub.advfn.com/boards/read_msg.aspx?message_id=141287457
Articles by Otting
https://www.americanbanker.com/author/joseph-otting

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10612 on: October 14, 2018, 02:29:58 PM »
https://www.reuters.com/article/us-usa-election-tennessee/in-tennessee-a-democrat-scrambles-to-turn-out-voters-as-polls-show-slide-idUSKCN1MO0C7

https://www.fool.com/investing/general/2015/04/01/a-step-in-the-right-direction-for-fannie-mae-and-f.aspx
Although Marsha Blackburn could be a much better congress person for FF shareholders, we cannot rely on what happened many years ago. This is politics. It is unwise to think that Calabria at FHFA or Blackburn replacing Corker would mean 'stars are aligning'.

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10613 on: October 15, 2018, 06:54:56 AM »
Chairman of MBA this morning...

https://twitter.com/DoddFrankUpdate/status/1051822050451578880
Chris George on #GSE reform: "We have got to get our agencies out of conservatorship." #MBAAnnual18
Take 4 minutes and listen to it. "Stars" by Skillet: https://www.youtube.com/watch?v=TbLJyjfyACM

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10614 on: October 15, 2018, 08:36:24 AM »
Chairman of MBA this morning...

https://twitter.com/DoddFrankUpdate/status/1051822050451578880
Chris George on #GSE reform: "We have got to get our agencies out of conservatorship." #MBAAnnual18

https://twitter.com/DoddFrankUpdate/status/1051856893189246976
Phillips: administration advocates end of conservatorship and a return of Fannie and Freddie to private ownership. #MBAAnnual18
Take 4 minutes and listen to it. "Stars" by Skillet: https://www.youtube.com/watch?v=TbLJyjfyACM

Luke 5:32

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Take 4 minutes and listen to it. "Stars" by Skillet: https://www.youtube.com/watch?v=TbLJyjfyACM

rros

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10616 on: October 15, 2018, 08:56:43 AM »
Video of Phillips: https://twitter.com/MBAMortgage/status/1051860342362390528
Thank you.

-> explicit guarantee fully paid paid for and on budget
- > charters removed (requires Congress)
- > seeks level-playing field through sizing (meaning, imo, shrinking FF).

Luke 5:32

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10617 on: October 15, 2018, 09:30:31 AM »
Where oh where are we going to get the necessary money for infrastructure plans? :-)

https://twitter.com/austinpkilgore/status/1051871781374574592
"We should think of housing as core infrastructure of the country," similar to roads and transportation, says outgoing @FannieMae CEO Tim Mayopolous #MBAAnnual18
« Last Edit: October 15, 2018, 09:34:14 AM by Luke 5:32 »
Take 4 minutes and listen to it. "Stars" by Skillet: https://www.youtube.com/watch?v=TbLJyjfyACM

orthopa

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10618 on: October 15, 2018, 11:45:59 AM »
Am I wrong in saying this is the first time Phillips has confirmed or said these things? Again market not buying it or ignoring it. Maybe market thinking time to implementation makes the securities still unattractive at these prices? Not sure what else needs to be said here besides when and how much. Market saying still no more then 25% of par at this point.
« Last Edit: October 15, 2018, 12:24:57 PM by orthopa »

investorG

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Re: FNMA and FMCC preferreds. In search of the elusive 10 bagger.
« Reply #10619 on: October 15, 2018, 12:07:16 PM »
Am I wrong in saying this is the first time Phillips has confirmed or said these things? Again market not buying it or ignoring it. Maybe market thinking time to implementation makes the securities still unattractive at these prices? Not sure what else needs to be said here besides when and how much. Market saying still no more then 25% of par at this point.

Phillips' comments seem good.  hopefully they are 'all in' to get this done in 2019 rather than just talking points.  His bullets appear to confirm the Mulvaney OMB plan from a few months ago and don't seem aligned with the House republicans' ginnie mae lovefest.

muted reaction could possibly be a) disappointed people who were still clinging to near term administrative action and b) supply overhang from hedge funds like highfields (gse owner) closing and possibly forced redemptions from owners like fairholme (see their performance).

hopefully they go hard in 2019 on this.  assuming they throw in some affordable housing $, it is not impossible for Congress to get this done next year with base case Pat Toomey and Maxine Waters leading and getting a lot but not all of what they want.