Thursday, December 4, 2014

TABLE 9. SERIOUS DELINQUENCY RATES 2007-2014

http://www.fanniemae.com/portal/about-us/investor-relations/monthly-summary.html

TABLE 9. SERIOUS DELINQUENCY RATES
                 No PMI / PMI loans/ Total / Multifamily
January 2006      0.45% 2.12% 0.77% 0.27%
December 2006  0.37% 1.81% 0.65% 0.08%
December 2007  0.53% 2.75% 0.98% 0.08%
August 2008       0.86% 4.26% 1.57% 0.16% FHFA takes over next month
--- conservator bigins----
September 2008 0.96% 4.68% 1.72% 0.16%
December 2008  1.40% 6.42% 2.42% 0.30%
December 2009  3.67% 13.51% 5.38% 0.63%
December 2010  3.40% 10.60% 4.48% 0.71%
December 2011  3.07% 9.10% 3.91% 0.59%
December 2012  2.70% 7.09% 3.29% 0.24%
December 2013  2.00% 4.75% 2.38% 0.10%
October 2014    1.65% 3.56% 1.92% 0.06%

This is where we stand now!
Multifamily NEVER a problem, as you may have heard. Apartment Buildings. (Landlords with Renters)
Definitely Multifamily was never a concern or reason for conservatorship.
December 2007  Was an acceptable Year and delinquency Rate as it tracks 3 years to 2005.
THEN: December 2007  0.53% 2.75% 0.98% 0.08%
NOW:  October 2014    1.65% 3.56% 1.92% 0.06%

Fannie delinquencies are falling about 0.05% per month for single family, in 18 months it will be at 2005-2007 ranges.
February 2010 3.90% 13.80% 5.59% 0.73% was the PEAK of Delinquencies.
August 2012    2.80%   7.56% 3.44% 0.25% Sweep was enacted. Delinquencies by this time had fallen uniformly across the board by about HALF. By the time of the sweep 2.5 years after PEAK it was clear the crisis was over and Fannie would be profitable for the foreseeable future.

This proves three things:
1. It was easy to see in August 2012 that Fannie was about to make a lot of profits since the DTA could only be used once Fannie became profitable.
2. That in 18 months or less Fannie will be on the same ground as far as Delinquencies go, as 2005-2007. Prior to conservatorship.
3. Fannie has been profitable since Late 2011 and since Fannie delinquencies were headed down for over 2 years, it was obvious at the time of sweep that Fannie was about to be in the money in a big way!!






Wednesday, December 3, 2014

Q3 2008, 22 days after conservatorship 10-Q fannie

Capital Management
 
Current Capital Classification
 
On October 9, 2008, FHFA announced that it will not issue quarterly capital classifications during the conservatorship. FHFA also announced that we were classified as “undercapitalized” as of June 30, 2008 (the most recent date for which results have been published by FHFA). FHFA determined that, as of June 30, 2008, our core capital exceeded our statutory minimum capital requirement by $14.3 billion, or 43.9%, and our total capital exceeded our statutory risk-based capital requirement by $19.3 billion, or 53.1%. Under the Regulatory Reform Act, however, FHFA has the authority to make a discretionary downgrade of our capital adequacy classification should certain safety and soundness conditions arise that could impact future capital adequacy. Accordingly, although the amount of capital we held as of June 30, 2008 was sufficient to meet our statutory and regulatory capital requirements, FHFA downgraded our capital classification to “undercapitalized” based on its discretionary authority provided in the Regulatory Reform Act and events that occurred subsequent to June 30, 2008. FHFA cited the following factors as supporting its decision:
 
 • Accelerating safety and soundness weaknesses, especially with regard to credit risk, earnings outlook and capitalization;

105

Table of Contents
 
 • Continued and substantial deterioration in equity, debt and MBS market conditions;
 
 • Our current and projected financial performance and condition, as reflected in our second quarter financial report and our ongoing examination by FHFA;
 
 • Our inability to raise capital or to issue debt according to normal practices and prices;
 
 • Our critical importance in supporting the country’s residential mortgage market; and
 
 • Concerns that a growing proportion of our statutory core capital consisted of intangible assets.
 
Under the Regulatory Reform Act, a capital classification of “undercapitalized” requires us to submit a capital restoration plan and imposes certain restrictions on our asset growth and ability to make capital distributions. FHFA may also take various discretionary actions with respect to an enterprise that is classified as undercapitalized, including requiring the enterprise to acquire new capital. FHFA has advised us that, because we are under conservatorship, we will not be subject to these corrective action requirements.
 
Regulatory Capital Requirements
 
On October 9, 2008, FHFA announced that our existing statutory and FHFA-directed regulatory capital requirements will not be binding during the conservatorship. FHFA has directed us, during the time we are under conservatorship, to focus on managing to a positive stockholders’ equity while returning to long-term profitability.
 
As noted above, FHFA also announced on October 9, 2008 that it will not issue quarterly capital classifications during the conservatorship. We will continue to submit capital reports to FHFA during the conservatorship and FHFA will continue to closely monitor our capital levels. Our minimum capital requirement, core capital and GAAP net worth will continue to be reported in our periodic reports onForm 10-Q and Form 10-K, as well as on FHFA’s website. FHFA has stated that it does not intend to report our critical capital, risk-based capital or subordinated debt levels during the conservatorship.
 
Pursuant to its new authority under the Regulatory Reform Act, FHFA has announced that it will be revising our minimum capital and risk-based capital requirements.
 
Table 39 displays our regulatory capital classification measures as of September 30, 2008 and December 31, 2007.
 
Table 39:  Regulatory Capital Measures
 
         
  As of 
  September 30,   December 31,  
  2008 (1)  2007 
  (Dollars in millions) 
 
Core capital (2)
 $16,645  $45,373 
Statutory minimum capital (3)
  33,024   31,927 
         
Surplus (deficit) of core capital over statutory minimum capital
 $(16,379) $13,446 
         
Surplus (deficit) of core capital percentage over statutory minimum capital
  (49.6)%  42.1%
 
 
(1)Amounts as of September 30, 2008 represent estimates that have not been submitted to FHFA. Amounts as of December 31, 2007 represent FHFA’s announced capital classification measures.
 
(2)The sum of (a) the stated value of our outstanding common stock (common stock less treasury stock); (b) the stated value of our outstanding non-cumulative perpetual preferred stock; (c) our paid-in capital; and (d) our retained earnings. Core capital excludes accumulated other comprehensive income (loss).
 
(3)Generally, the sum of (a) 2.50% of on-balance sheet assets; (b) 0.45% of the unpaid principal balance of outstanding Fannie Mae MBS held by third parties; and (c) up to 0.45% of other off-balance sheet obligations, which may be adjusted by the Director of FHFA under certain circumstances (See 12 CFR 1750.4 for existing adjustments made by the Director).

106

Table of Contents
 
As of September 30, 2008, our core capital was $16.4 billion below our statutory minimum capital requirement; however, as described above, our capital requirements are suspended during the conservatorship. The reduction in our core capital compared to the previous quarter was primarily due to the non-cash charge of $21.4 billion during the third quarter of 2008 relating to our establishment of a valuation allowance with respect to a portion of our deferred tax assets.
 
Capital Activity
 
Capital Management Actions
 
Prior to our entry into conservatorship on September 6, 2008, we took a number of management actions during 2008 to preserve and further build our capital, including:
 
 • issuing $7.4 billion in equity securities;
 
 • managing the size of our investment portfolio;
 
 • selling assets to reduce the amount of capital that we were required to hold and to realize investment gains;
 
 • reducing our common stock dividend;
 
 • electing not to purchase mortgage assets;
 
 • slowing the growth of our guaranty business;
 
 • increasing our guaranty fee pricing on new acquisitions;
 
 • evaluating our costs and expenses with the expectation to reduce administrative costs; and
 
 • applying other changes to our business practices to reduce our losses and expenses during the period.
 
As described above, following our entry into conservatorship, FHFA has advised us to focus our capital management efforts on maintaining a positive stockholders’ equity while returning to long-term profitability. As a result of this change in the focus of our capital management efforts and an increased focus on serving our mission since our entry into conservatorship, we have discontinued or reversed most of the capital management strategies described above.
 
As of September 30, 2008, we had stockholders’ equity of $9.3 billion, compared to $44.0 billion as of December 31, 2007. Our stockholders’ equity has decreased substantially since December 31, 2007 primarily due to our net loss of $33.5 billion for the nine months ended September 30, 2008. The primary driver of our net loss for the period was a non-cash charge of $21.4 billion in the third quarter of 2008 relating to our establishment of a valuation allowance with respect to a portion of our deferred tax assets. This charge and the other drivers of our net loss for the first nine months of 2008 are described in “Consolidated Results of Operations.” Approximately 50% of our stockholders’ equity as of September 30, 2008 consisted of our remaining deferred tax assets, which could be subject to a further valuation allowance in the future. In addition, the widening of spreads that occurred in October 2008 resulted in mark-to-market losses on our investment securities that have decreased our stockholders’ equity since September 30, 2008.
 
Our ability to manage our stockholders’ equity is very limited. In order to help maintain a positive stockholders’ equity, we have modified our hedging strategy, as described in “Consolidated Results of Operations.” We are effectively unable to raise equity capital from private sources at this time. Accordingly, if we cannot maintain a positive stockholders’ equity, we may need to draw on Treasury’s funding commitment under the senior preferred stock purchase agreement in order to avoid a mandatory trigger of receivership under the Regulatory Reform Act.

Tuesday, December 2, 2014

Fannie was forced to buy MBS from banks after conservatorship.

June 30, 2008 before conservatorship


As of
June 30, December 31, 
20082007 (1)
(Dollars in millions)
Balance sheet data:
Investments in securities:
Trading
$99,562$63,956
Available-for-sale
245,226293,557
Mortgage loans:
Loans held for sale
6,9317,008
Loans held for investment, net of allowance
411,300396,516
Total assets
885,918879,389
Short-term debt
240,223234,160
Long-term debt
559,279562,139
Total liabilities
844,528835,271
Preferred stock
21,72516,913
Total stockholders’ equity
41,22644,011
Regulatory capital data:
Core capital (7)
$46,964$45,373
Total capital (8)
55,56848,658
Book of business data:
Mortgage portfolio (9)
$754,116$727,903
Fannie Mae MBS held by third parties (10)
2,252,2822,118,909
Other guarantees (11)
31,81241,588
Mortgage credit book of business
$3,038,210$2,888,400
Guaranty book of business (12)
$2,898,207$2,744,237


Sept 30, 2008 After conservatorship

Loans held for investment, net of allowance
397,834396,516
Total assets
896,615879,389
Short-term debt
280,382234,160
Long-term debt
550,928562,139
Total liabilities
887,180835,271
Senior preferred stock
1,000
Preferred stock
21,72516,913
Total stockholders’ equity
9,27644,011
Regulatory data:
Net worth (9)
9,43544,118
Book of business data:
Mortgage portfolio (10)
$767,166$727,903
Fannie Mae MBS held by third parties (11)
2,278,1702,118,909
Other guarantees (12)
32,19041,588
Mortgage credit book of business (13)
$3,077,526$2,888,400
Guaranty book of business (14)
$2,941,116$2,744,237

Dec 30, 2008 After 4 months of conservatorship


As of December 31,
20082007200620052004
(Dollars in millions)
Balance sheet data:
Investments in securities:
Trading
$90,806$63,956$11,514$15,110$35,287
Available-for-sale
266,488293,557378,598390,964532,095
Mortgage loans:
Loans held for sale
13,2707,0084,8685,06411,721
Loans held for investment, net of allowance
412,142396,516378,687362,479389,651
Total assets
912,404879,389841,469831,6861,018,188
Short-term debt
330,991234,160165,810173,186320,280
Long-term debt
539,402562,139601,236590,824632,831
Total liabilities
927,561835,271799,827792,263979,210
Senior preferred stock
1,000
Preferred stock
21,22216,9139,1089,1089,108
Total stockholders’ equity (deficit)
(15,314)44,01141,50639,30238,902
Regulatory capital data:
Net worth surplus (deficit) (9)
$(15,157)$44,118$41,642$39,423$38,978
Book of business data:
Mortgage portfolio (10)
$792,196$727,903$728,932$737,889$917,209
Fannie Mae MBS held by third parties (11)
2,289,4592,118,9091,777,5501,598,9181,408,047
Other guarantees (12)
27,80941,58819,74719,15214,825
Mortgage credit book of business (13)
$3,109,464$2,888,400$2,526,229$2,355,959$2,340,081
Guaranty book of business (14)
$2,975,710$2,744,237$2,379,986$2,219,201$2,167,433

What can we LEARN? Short term debt and Mortgage Portfolio hold keys I think.

Looking at the Mortgage portfolio from Jan 2008-Jun 2008 Portfolio rose from 727 billion to 754 billion.
This is an increase in portfolio of 13.5 billion a quarter in the first 2 quarters of 2008, before conservatorship.

From July 2008 to Sept 2008 the portfolio grew from 754 billion to 767 billion, again 13 billion. This is only 22 days of conservatorship at this point.

From Oct 2008 to Dec 2008 Q4 portfolio grew from 767 to 792. This is 25 billion in one Quarter. 12 billion over the previous 3 quarters. Where did this 12 billion in MBS come from if not PLS that the banks held? Just as FHFA Lockhart said they would be buying MBS from others to replace GSE ones.

Lets look at short term debt. From Jan 2008-June2008 Short term debt went from 234 billion to 240 billion.
This is an increase of 6 billion over 2 quarters or 3 billion a quarter. Before conservatorsip.

From july 2008 to Sept 2008 the short term debt grew from 240 billion to 280 billion in one quarter. That is 40 billion in one Quarter added to short term debt. 22 days into conservatorship.

From Oct 2008 to Dec 2008 Q4 short term debt grew from 280 billion to 330 billion, and increase of 50 billion in one quarter. How is that possible? The MBS from PLS were being transferred to F&F from the banks that bought Bear Sterns and Countrywide and the Alt-a and subprime Garbage that came with it.

First 2 quarters of the year 3 billion a quarter of short term debt, changed to 40 billion plus per quarter only after conservatorship took over. Impossible. This debt was being pushed on F&F along with MBS to their portfolios at outrageous rates. Only in conservatorship could this happen. NO FREE CORPORATION would take on this DEBT or MBS. This is why the takeover occurred.
=========================================================
From Q3 2008, after conservatorship!

http://yahoo.brand.edgar-online.com/displayfilinginfo.aspx?FilingID=6236990-941-1347011&type=sect&TabIndex=2&companyid=7848&ppu=%252fdefault.aspx%253fcik%253d310522

• Discount Notes.   We issue short-term debt securities called Discount Notes with maturities ranging from overnight to 360 days from the date of issuance. Investors purchase these notes at a discount to the principal amount and receive the principal amount when the notes mature.

However, since early July 2008, we have experienced significant deterioration in our access to the unsecured debt markets, particularly for long-term debt, and a significant increase in the yields on our debt as compared to relevant market benchmarks. Although we experienced a slight stabilization in our access to the short-term debt markets immediately following the entry into conservatorship in early September, we saw renewed deterioration in our access to the short-term debt markets following the initial improvement. Beginning in October, consistent demand for our debt securities has decreased even further, particularly for our long-term and callable debt, and the interest rates we must pay on our new issuances of short-term debt securities have increased. Although we experienced a reduction in LIBOR rates in late October and early November, and as a result we have begun to see some improvement in our short-term debt yields, the recent improvement may not continue or may reverse. We have experienced reduced demand for our debt obligations from some of our historical sources of that demand, particularly in international markets.

From Q3 2008, after conservatorship!
Due to the limitations on our ability to issue long-term debt, we have relied increasingly on short-term debt to pay off our maturing debt and to fund our ongoing business activities, and we issued a higher amount of short-term debt than long-term debt during the third quarter of 2008, as compared to the third quarter of 2007. In addition, during September, we significantly increased our portfolio of cash and cash equivalents, which, given our lack of access to the long-term debt markets, has been achieved exclusively through the issuance of additional short-term debt. Finally, during September and into early October, we increased our purchases of mortgage assets to provide additional liquidity to the mortgage market. This activity has also been achieved exclusively through the issuance of additional short-term debt. As a result, our outstanding short-term debt increased from 29.4% of our total debt as of December 31, 2007 to 33.7% as of September 30, 2008. Our short-term debt including the current portion of long-term debt was an estimated 44% of our outstanding debt as of September 30, 2008. The weighted-average maturity of our short-term and long-term debt decreased to 46 months for the third quarter of 2008 from 52 months for the third quarter of 2007.

we have relied primarily on a combination of short-term debt, interest rate swaps and swaptions to fund mortgage purchases and to manage our interest rate risk.

In September 2008, Treasury proposed a plan to buy mortgage-related, illiquid and other troubled assets from U.S. financial institutions. Also in September 2008, the Federal Reserve announced enhancements to its programs to provide additional liquidity to the asset-backed commercial paper and money markets, including plans to purchase from primary dealers short-term debt obligations issued by us, Freddie Mac and the Federal Home Loan Banks. As an additional response to the still worsening credit conditions, the U.S. government and other world governments took a number of actions. In early October 2008, the Emergency Economic Stabilization Act of 2008 was enacted, and the Federal Reserve announced that it would establish a commercial paper funding facility in order to provide additional liquidity to the short-term debt markets. Also, in October 2008, the Federal Reserve and other central banks lowered interest rates in a coordinated action.
On October 14, 2008, the U.S. government announced a series of initiatives to strengthen market stability, improve the strength of financial institutions, and enhance market liquidity. Treasury announced a capital purchase program in which eligible financial institutions would sell preferred shares to the U.S. government. Under the program, Treasury will purchase up to $250 billion of senior preferred shares on standardized terms. As of November 1, 2008, Treasury had invested $125 billion in nine large financial institutions under this program. In addition, the Federal Deposit Insurance Corporation, or FDIC, announced a temporary liquidity guarantee program pursuant to which it will guarantee, until June 30, 2012, the senior debt issued on or before June 30, 2009 by all FDIC-insured institutions and their holding companies, as well as deposits in non-interest-bearing accounts held in FDIC-insured institutions. Also, the Federal Reserve announced that its commercial paper funding facility program will fund purchases of commercial paper of three-month maturity from high-quality issuers in an effort to provide additional liquidity to the short-term debt markets.

The increase in average outstanding Fannie Mae MBS and other guarantees reflected our higher market share of mortgage-related securities issuances during the first nine months of 2008, as compared to the first nine months of 2007. We experienced this market share increase in large part due to the near-elimination of competition from issuers of private-label mortgage-related securities.

The increase in investment losses for the third quarter and first nine months of 2008 over the third quarter and first nine months of 2007 was primarily attributable to the significant increase in other-than-temporary impairment on available-for-sale securities, principally for Alt-A and subprime private-label securities. We recognized other-than-temporary impairment on these securities of $1.8 billion and $2.4 billion in the third quarter and first nine months of 2008, respectively, reflecting a reduction in expected cash flows due to an increase in expected defaults and loss severities on the mortgage loans underlying these securities.

Alt-A and Subprime Private-Label Wraps
In addition to Alt-A and subprime private-label mortgage-related securities included in our mortgage portfolio, we also have exposure to private-label Alt-A and subprime mortgage-related securities that have been resecuritized (or wrapped) to include our guaranty. The unpaid principal balance of these Fannie Mae guaranteed securities held by third parties is included in outstanding and unconsolidated Fannie Mae MBS held by third parties, which we discuss in “Off-Balance Sheet Arrangements and Variable Interest Entities.” Table 28 presents the unpaid principal balance of our Alt-A and subprime private-label wraps as of September 30, 2008 and additional information to evaluate our potential loss exposure. We held $7.7 billion of these securities in our mortgage portfolio as of September 30, 2008.

what about this one from 10-Q 3 2008 Fannie mae:
In September 2008, Treasury proposed a plan to buy mortgage-related, illiquid and other troubled assets from U.S. financial institutions.
and
I recall the majority of all loans in 2008 were getting tossed to fannie and freddie as all the major banks were failing. My personal mortgage by chase was tossed to fannie after never having a problem. It then qualified under HARP.
and
Tarp:
using TARP money by the Department of Treasury. Because “at risk” mortgages are defined as “troubled assets” under TARP, the Treasury has the power to implement the plan. Generally, it provides refinancing for mortgages held by Fannie Mae or Freddie Mac; during the Federal takeover of these two enterprises, the Federal government provided a $317 billion asset relief, dwarfing the TARP bailout program
and
FHFA’s own words state they will be buying them. They may not have all been bad loans but where did the loans from PLS end up? In the banks hands that bought them. And who had to pay huge lawsuit fines for passing off crap loans to F&F? Those same banks. It seems obvious to me that PLS was absorbed by TBTF banks and those banks intern sold their assets to F&F. Toxic or otherwise at a time when F&F were writing off huge DTA’s on the amount of garbage they were purchasing. Those DTA’s did not start hitting the books of fannie and freddie till OCT 2008. 22 days after the conservatorship started.

Im saying give me 24 hours with the books of Fannie from OCT 2008 to Jan 2009 and I will find you the hole that they dropped all the crap loans into from the banks onto F&F. This is what Ackman wanted the books for when he asked for them.