Tuesday, March 10, 2015

FHFA defense in court from HERA against Fannie Mae shareholders

1. Conservator has power to wind up fannie mae. NO
2. HERA allows FHFA to give treasury all the profits. NO
3. Shareholder have no rights. NOT true, we have constitutional rights above HERA. 5th amendment.

Only if fannie is a limited-life entity! It is not!
Only way to be a limited life entity is if RECEIVER! The DOJ will tell you FHFA is conservator NOT receiver.
Only if in Recivership can FHFA Wind up begin.
HERA does not allow for Treasury to tell FHFA to give all profits of regulated entity to Treasury.
Both Receiver and Conservator are REQUIRED to preserve and conserve the assets and property of the regulated entity, There is no preserving or conserving in giving 100% profits to Treasury!


here is why:
(i) Limited-life regulated entities
(1) Organization
(A) Purpose
The Agency, as receiver appointed pursuant to subsection (a)—
(6) Winding up
(A) In general
Subject to subparagraphs (B) and (C), not later than 2 years after the date of its organization, the Agency shall wind up the affairs of a limited-life regulated entity.
(i) Limited-life regulated entities
(1) Organization
(A) Purpose
The Agency, as receiver appointed pursuant to subsection (a)
(i) may, in the case of a Federal Home Loan Bank, organize a limited-life regulated entity with those powers and attributes of the Federal Home Loan Bank in default or in danger of default as the Director determines necessary, subject to the provisions of this subsection, and the Director shall grant a temporary charter to that limited-life regulated entity, and that limited-life regulated entity may operate subject to that charter; and
(ii) shall, in the case of an enterprise, organize a limited-life regulated entity with respect to that enterprise in accordance with this subsection.
(E) Additional powers as receiver
In any case in which the Agency is acting as receiver, the Agency shall place the regulated entity in liquidation and proceed to realize upon the assets of the regulated entity in such manner as the Agency deems appropriate, including through the sale of assets, the transfer of assets to a limited-life regulated entity established under subsection (i), or the exercise of any other rights or privileges granted to the Agency under this paragraph.
(B) Operate the regulated entity
(iv) preserve and conserve the assets and property of the regulated entity; and
(D) Receivership terminates conservatorship
The appointment of the Agency as receiver of a regulated entity under this section shall immediately terminate any conservatorship established for the regulated entity under this chapter.
(7) Agency not subject to any other Federal agency
When acting as conservator or receiver, the Agency shall not be subject to the direction or supervision of any other agency of the United States or any State in the exercise of the rights, powers, and privileges of the Agency.

Treasury and Conservatorship by Timothy Howard Jan 11 2015

Treasury and Conservatorship by Timothy Howard Jan 11 2015




To understand what happened, it is useful to think of Fannie Mae’s earnings as having three basic components: (a) revenues from the company’s two businesses, portfolio investments and credit guarantees, (b) annual expenses, principally administrative costs and credit losses, and (c) accounting gains or losses. During the eight years between 2003 and 2011, the combined revenues from Fannie Mae’s portfolio investments and credit guarantees grew irregularly but strongly, rising by almost 60 percent. The $162 billion in losses the company recorded from 2008 through 2011 was not due to a lack of revenue. Indeed, the $74 billion Fannie Mae booked in combined net interest income from its mortgage portfolio and guarantee fees from its mortgage-backed securities during the 2008- 2011 period was more than enough to cover not only the huge $62 billion spike in its actual credit losses (charge-offs net of recoveries, plus foreclosed property expense) but also its cumulative $9 billion in administrative expenses during that time. Put another way, all of Fannie Mae’s GAAP losses from 2008 through 2011 stemmed from accounting entries and judgments: principally the exceptionally large $70 billion increase in its reserve for future loan losses, and significant write-downs of a number of items on the company’s balance sheet (which are not possible to calculate precisely because of the complexity of Fannie Mae’s GAAP accounting). Many of the write-downs were made near the low points of asset values and were subject to upward revision in future periods, while the loss reserve similarly was predicated on pessimistic projections of future home prices, loan defaults and loss severities. The turning point for both sets of accounting decisions came during the first half of 2012. After falling by almost 24 percent from the third quarter of 2006 to the first quarter of 2012, Fannie Mae’s index of home prices rose by 3.2 percent in the second quarter of 2012. This jump in home prices, together with a sharp rise in the prices received for sales of foreclosed homes and a further decrease in Fannie Mae’s single-family serious delinquency rate, convinced the company that it could begin to use its ample loss reserve to absorb current-period credit losses. Doing so meant that nearly all of Fannie Mae’s $5.8 billion in pre-tax revenues reached its bottom line in the second quarter, since tax loss carry-forwards made its federal income tax liability zero. The company was able to make its $2.9 billion quarterly dividend payment to Treasury and still add $2.5 billion to its net worth. With a positive net worth, strong revenues, a declining loss reserve, the tax loss carry-forward, and the likelihood of upward asset price revaluations and the successful resolution of loan repurchase claims over the next several quarters, it suddenly became apparent that Fannie Mae would not need any further draws from Treasury for quite a long period of time. And if that were the case, the decision Treasury and FHFA had made in 2008 to establish a valuation reserve for Fannie Mae’s deferred tax assets soon would be reversed, adding even further to the company’s profits, retained earnings and capital. 6

 
Treasury, of course, knew all this; it was the one that had engineered Fannie Mae’s accounting losses and excessive loss reserving in the first place, following the roadmap of the March 2008 paper, “Fannie Mae Insolvency and its Consequences.” Treasury and FHFA agreed to the third amendment to the senior preferred stock agreement—in which Fannie Mae and Freddie Mac would be required to give all of their future profits to Treasury instead of paying a quarterly preferred stock dividend—so that the government, and not the company’s shareholders, would reap the benefits of the now-imminent reversal of many of the earlier accounting-related write-downs. It was even less difficult for Treasury to get FHFA to agree to the third amendment in 2012 than it had been in 2008 getting director Lockhart to agree to reduce Fannie Mae and Freddie Mac’s surplus capital percentage, or to reverse his previous public position that the companies were safe and sound and adequately capitalized. In 2012 the acting director of FHFA was Ed DeMarco, who from 1993 to 2003 had worked at Treasury as director of the Office of Financial Institutions Policy.
Treasury insists that the third amendment was essential to prevent the companies from having to undertake an endless cycle of borrowing in order to continue to make their dividend payments. But with the third amendment coming only after Fannie Mae had begun to rebuild its capital—and with the reversal of its reserve for deferred tax assets having become a virtual certainty—this rationale crumbles in the face of the factual record.


HARP, HAMP was transfer of mortgages to Fannie and Freddie.

HARP, HAMP was transfer of mortgages to Fannie and Freddie.
You obtained your mortgage on or before January 1, 2009.
Fannie takeover Sept 2008.
HAMP
Many mortgage companies (servicers) — including Bank of America, JP Morgan Chase, Wells Fargo, and Ocwen — participate in MHA Programs. View the complete list and contact your mortgage company today. If your mortgage is owned, insured, or guaranteed by Fannie Mae, Freddie Mac, Federal Housing Administration (FHA), Veterans Affairs, or U.S. Department of Agriculture (USDA), ask your mortgage company which solutions will work best for you. You obtained your mortgage on or before January 1, 2009.
Hamp was made specifically for Pre-conservatorship fannie mae.
You may be eligible for HAMP if you meet the following criteria:
Because of a financial hardship, you are struggliing to make your mortgage payments.
You are delinquent or in danger of falling behind on your mortgage.
You obtained your mortgage on or before January 1, 2009.
Your property has not been condemned.
You owe up to $729,750 on your primary residence or one-to-four unit rental property (loan limits are higher for two- to four-unit properties).
I believe this is where the money transfer for MBS came from.
I know first hand in 2009 I did NOT have a Fannie mae loan on my personal house, but when I checked to find out if I qualified for Harp/Hamp sure enough Fannie was holding my mortgage. How did this happen? MBS was indeed transferred from PLS where my original mortgage was originated to Fannie MBS prior to me getting a HAMP refinance at new lower rate.
I would like to know how many others had the same happen to them? On an individual level Im sure PLS was transferred to Fannie MBS behind the scenes, because in MY case it DID happen! Im sure im not the only one!
But if I am the only one, this would constitute a case where it DID happen.
What if there was a circular pattern from PLS to treasury then to Fannie.
What if Treasury bought from PLS as it was failing HUGE, then changed the instrument since they were now the owners of that loan?
What if treasury modified it into a Loan that Fannie could take by its charter and then sold it to Fannie? What if it did this while fannie was clearing mortgages from its books of older mortgages?
Here is a thought, 30 year mortgages clear 10% of their mortgages every 3 years.
Fannie started making money again in about 3 years.
Fannie has a larger book of business than it did 6 years ago. Would it not make sense that Fannie mae would clear the PLS bad loans into their book at same rate as they were removing old loans?
would it not make sense that if Fannie bought its MBS from treasury, that treasury bought from PLS, that Treasury would have to make it conforming by buying up the percentage of the loan that would make it able to have fannie buy it? Fannie could only buy if the treasury sold them a 80% LTV by fannie charter. Could it be Treasury bought the crap part of the loan and sold the Foreclosable value to Fannie to do just that, either foreclose or HAMP or Harp that loan?
Behind the Treasurys curtain of misinformation is the answer to how my house ended up in Fannie mae’s book in 2009 when it was not in 2007 when I first got the mortgage!
Another item I will add is All banks at the time 2008 were selling their PLS qualified loans in mass to fannie and freddie simultaneous to PLS failing. I think this is how my loan moved from PLS to fannie, as my loan would qualify under conforming as I had over 25% down and held zero PMI on my loan!
Again BANKS were moving PLS to Fannie MBS in 2008.

Sunday, March 8, 2015

Who's cheating who? FHFA has everyone fooled or is the Treasury that's the puppet master?

http://www.law360.com/articles/627635/sullivan-cromwell-denies-witness-coaching-in-fhfa-suit

The FHFA sued Nomura and a host of other banks in 2011, alleging they sold more than $180 billion in allegedly toxic subprime MBS based on misrepresentations of the underlying mortgages’ quality and their review of those mortgages between 2005 and 2007. Those failed securities helped send the two mortgage giants into conservatorship.

The majority of banks involved in the cases have settled with the FHFA.

Now Fannie Mae and Freddie Mac needed $186 billion, and banks defrauded (a crime) more that $180 billion. What exactly did Fannie and Freddie do then to deserve the Rape and Witch hunt that the politicians have done to them? 
I know, they saved the USA housing markets from criminal banks! 
But who's counting that in their favor? I am, so that makes one! 
Too bad the news in America is not free like it was in the prior decades. 
Its a shame the news is so controlled by their masters!