Friday, March 20, 2015

Starting to sound very different in 2015: Fannie Mae

Delaney, Carney & Himes File Housing Finance Reform Legislation to Protect 30-Year Mortgage & Taxpayers


The bill winds down Fannie Mae and Freddie Mac and allows them to be sold and recapitalized.

Small Lender Access

* During the transition Fannie and Freddie may remain as aggregators of mortgage loans for small lenders that do not have the sufficient volume to pool and create these new securities with their mortgage loans on their own, so long as adequate private sector alternatives do not exist

Winding Down Fannie and Freddie

* Fannie and Freddie will be wound down over a five year period. Their government guarantee and charter will be removed and they will repay the government with interest for the government's investment in the institutions. The repayment must take into account both the injection of capital and overall exposure to the government. THIS IS DONE ALREADY $90 billion profit now to taxpayers!

* During the transition, Fannie and Freddie may act as an aggregator for small lenders to retain small lender access to the new Ginnie Platform.

* The transition will continue until competitive access for small lenders is established and Ginnie has achieved an adequate return to taxpayers and established a competitive private housing finance market.

* The assets of Fannie and Freddie will be returned to the private sector and may operate within the new mortgage system as issuers and/or aggregators 

Multifamily Housing

* Fannie and Freddie's multifamily business will be spun out as separate entities. Ginnie will be required to create and implement a workable multifamily guarantee that utilizes private sector pricing consistent with the single family model.

* The current multifamily businesses of Fannie and Freddie will continue to function within the new multifamily housing market as purely private organizations with an explicit government guarantee provided by Ginnie Mae and a private sector reinsurer.

Shareholders are still owners of these Spin-offs. (my comment)

* The assets of Fannie and Freddie will be returned to the private sector and may operate within the new mortgage system as issuers and/or aggregators
RETURNED!

*Fannie and Freddie’s multifamily business will be spun out as separate entities
Seperate entities! They cant spin off what they dont own, So those entities will be shareholders of current corps!

* The current multifamily businesses of Fannie and Freddie will continue to function within the new multifamily housing market as purely private organizations
Continue to function within the new housing market!

The talk on the Hill is changing rapidly from shutter to Recapitalize!
The fact that FHFA has let the two pay less in profit to Treasury in Q1 2015 is all part of the game. I guarantee it was decided to show less profits starting in 2015 to push the need to prevent another bailout. Bailouts are over. No one wants a bailout in 2015, this is not 2008!
Its all accounting Folks! Fannie is profitable! Very!
even at 1 billion per quarter after taxes, your looking at $4 billion a year
with a pe of 10 your staring at a $35 dollar stock. I suspect the profits are more in the $2 billion a quarter range! $70 dollar stock. Again its all accounting, FHFA accounting directed onto Fannie Mae!



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