Friday, May 8, 2015

This puts an END to "was fannie sold PLS mortgages"

This puts an END to "was fannie sold PLS mortgages".
From fannie 10-q Q1 2015
the first quarter of 2014, consisting of net income of $5.3 billion and other comprehensive income of $372 million . The decrease in comprehensive income was primarily driven by revenue of $4.1 billion recognized in the first quarter of 2014 resulting from settlement agreements resolving certain lawsuits relating to private-label mortgage-related securities (“PLS”) sold to us. The decrease in comprehensive income was also attributable to a decline in credit-related income and an increase in fair value losses.
again:
from settlement agreements resolving certain lawsuits relating to private-label mortgage-related securities (“PLS”) sold to us.

Remember FHFA settled for 10 cents on the dollar, That $4.1 Billion for Q1 2014 was in reality $41 billion dollars worth of PLS sold to Fannie in ONE QUARTER!

Thursday, May 7, 2015

Fannie and Freddie are the american system and that is why they cant wind them down

If Fannie kept the money it would have made interest on the DTA and since they turned the DTA into cash, there is no reason to believe if they had kept it and simply used the interest they earned on that money, they could have used the 2013 79 billion for many quarters to pay the 2.9 billion dividend per quarter.

79 billion at 5% a year could have paid the interest for almost 2 of the 4 quarters.
this could have went on for years, UNTIL fannie could just get a new loan and pay treasury off. maybe a 3% loan, at current rates that it loans money just 2 years later.

Now if Fannie was allowed to get a new loan at 2015 rates of 3% then Fannie would have paid back treasury instead of 10% punitive 2008 LOAN.

USA government is forbidden from making investments into private corporations to produce a profit! Im sure we all know this as true. Name one instance where the government makes investments in order to make a profit? Outside of TARP of course!

Im sure a lawyer could win that argument. Is the Treasury investing in APPLE trying to make a profit. Maybe giving them all the tech for i phones? No they are not.

2008 10% loan = punitive
2015 10% loan = Loan sharking

Fannie and Freddie should not be paying 10% when both have AAA credit ratings!
They could borrow the $187 in the free market at 3% im sure, they do everyday!
Its their business. I think i read fannie added $250 billion of liquidity this quarter.
Im sure they could get a better loan. Hell I would get in line for 5% quartered and Im a nobody with a savings account paying 0.25%.

Fannie cant get new loan because FHFA conservator wont allow them to.
If the government wants to run mortgages this bad, whats the chances of getting rid of fannie and allowing Bank of america to run mortgages?

Bank america going to allow 3% down? under 700 fico score? Please! No way.
Jp morgan going to allow 30 year fixed at today rates, on its books for 30 years?
Give it to the banks and watch how fast mortgages come to a stop and how NO ONE can buy a house, everyone rents. I wonder what the economy will think of this future? Without real estate, the USA economy will come to a complete HALT and FAIL.
Look at 2008 for the Truth! That is what happens when real estate market STOPS.
Housing price would fall without the 30 year mortgage. WHY?
Because Jobs dont pay enough to allow for 10 year and 5 year mortgages monthly payments, let alone balloon payments at the end of 5 years. What if im unemployed like in 2008 when my 5 year balloon hits and NO ONE will refinance me? Foreclosure.
What do Foreclosures do? Decrease values of housing in every neighborhood they exist in. This is all a lie and shame on the US for allowing this type of political wind bag talk about Americas only housing finance system it will ever have, this one we have right now, Fannie and Freddie are the american system and that is why they cant wind them down!! All a lie, pathetic.

7 years plus off of 2013 payments, im sure another 7 years off the 2014 payments, add interest and you would be in about 20 years worth of payments at $12 billion a year. Point is i am sure sometime between 2013 and 2033, Fannie could get a better rate than 10% and pay off the treasury with a new loan.
Look at Greece they do it every 2 years. Hell every company does it. Fannie could just issue bonds at 5% and only pay 6 billion a year in interest fixed with a AAA rating! this would equate to 1.5 billion a quarter from here to forever.
Lets not forget, Fannie paid just now 1.9 billion to Treasury, but I suspect there is some finagling going on with the books, Derivative Losses that will be reversed as rates rise. Smallest payment since 2009.

Wednesday, May 6, 2015

US Treasury INTENTION SPSA, FHFA for Fannie Mae = BOMBSHELL

http://www.fasab.gov/pdffiles/dec08mins.pdf

Final Meeting Minutes on December 17-18, 2008

Mr. Reid then noted that at September 30 it was probably too early for the GSE’s to develop estimates. As such, they should be in a better position by December 31st to take matters into consideration such as defaults and non-payments which are the underlying securities and that Treasury will need to react to that appropriately. Mr. Lingebach responded by stating that the September 30 GSE figures were not audited but it did appear to Treasury that the GSE’s were trying to scrub their figures. He further noted that what triggered the payment to Freddie was the write-off of certain deferred tax assets.

Mr. Dacey went on to explain that at the end of the day, the preferred stocks (subject to valuation write-downs) will be on the federal government’s balance sheet. At this point, Mr. Steinberg asked whether or not it was possible for the Federal government to financially benefit from these transactions. Mr. Lingebach stated yes, but noted only to the extent that the GSE’s do well going forward.

Treasury NOTES: YES conservatorship will be profitable to the Government!

Mr. Farrell inquired that if Treasury recorded this as an expense, did the GSE’s as a result book this as income/revenue or possibly as an accounts receivable. Mr. Lingebach replied that the GSE’s booked these transactions directly to equity. Mr. Farrell then asked that if at the end of the fourth quarter the GSE’s show assets to be greater than liabilities; would they be required to pay the federal government back? Mr. Lingebach replied in the negative stating that there is no repayment provision.

TREASURY NOTES: NO, the GSE's do not record TDA as a POSITIVE in accounting! But the Treasury knows they are there!!

After Treasury ‘s explanation, Mr. Patton then asked to review the language on page 3 of the referenced position paper specific to the journal entry language. Mr. Lingebach confirmed that the language should have been revised to read that the debit would be to an expense and not to a deferred asset. For clarification purposes, Mr. Dacey noted that the asset belongs to the general fund and the expense is incurred by Treasury. Mr. Jackson then added that this is because appropriated funds were being used and that in
essence, the transaction nets out to a zero-sum noting that the liability is basically “repaying” the appropriation.

Treasury Explains the Loaned money costs TAXPAYERS NOTHING!

Mr. Geiger then went on to say that one of the difficulties the firm had in doing the valuation was that there were some off balance sheet transactions that complicated the analysis and it was not as clear-cut as Treasury had hoped for. Also, the high-end of the range, $200 B was not an accounting estimate but was a figure developed from a public policy perspective to give confidence to the markets.

Treasury NOTES: $200 B was not an accounting estimate, but like an insurance to the market!

Mr. Dacey reviewed that in theory, the September 30 balance sheets reflected GSE fair values as well as write-downs of their other assets; i.e. due to impairment. As a result, and again in theory, if the GSE’s remained solvent going forward, then the $13.8 B would be the extent of the liability. However, Mr. Dacey did point out that the conversations held with the GSE’s confirmed that if the market declines further, there would be further losses to absorb. The problem is that one cannot project with any degree of certainty how much further, if any, the market could decline.

NOTE: The DOJ is fighting in court asserting the Treasury knew nothing of the DTA's. THIS is NOT true, this document proves this!

Mr. Werfel clarified this by stating that a review of the accounting literature leads to the answer that generally 51 percent ownership would require consolidation with the exception that if the ownership is deemed temporary, then Treasury would not have to consolidate the GSE’s. Mr. Werfel further noted that the warrants which are analogous to stock options do not constitute control. Also, if the warrants were exercised with the intention of selling them off, there would be no requirement to consolidate. However, Mr. Farrell noted that regardless of the exercise of the warrants, it seems that the government has at least the appearance of control as it can replace management and dictate Board appointments, approve certain transactions, etc. This led Mr. Farrell to ask about the concept of control.

NOTE: Warrants were to give the illusion of control, NOT ownership, as this would put the $5.5 trillion on the Governments books!

Mr. Jackson asked if the common stock was now worthless from an Internal Revenue Service point of view and Mr. Werfel stated that the shares are now down below a dollar and were trading close to about $6.00 at the time of the conservatorships' announcement. OMB estimated that the exercise price for the warrants was approximately $640,000.00.
Mr. Jackson made two additional points: (1) He agreed with Mr. Steinberg that concept statement 2 never contemplated events which are now taking place. As such, FASAB may need to go back and look at some of its statements to see if changes are needed and (2) the role of government is at question. That is, the government is taking possession not for ownership sake but rather, in order to protect the general interest and welfare of the people. The sole purpose in this case is to bring stability to the markets and not become owners. Somewhere, whether in FASAB standards or its concept statements, the Board may need to reflect this unique role of government as protector and not proprietor.

Note: Government the role of government is in question! Is it an investor? Owner of private for profit companies?

Mr. Lingebach said that was correct and that market increases would only be shown in the disclosures. Mr. Geiger then added that we should clarify the revenue piece. The revenue received in exchange for the liquidity guarantee in this case amounted to $7 billion. This represents the standard fee that an organization would get for providing such a guarantee.

Government states $7 billion is the needed FEE for $200 billion commitment! There is The Treasury profit above the draw for SPSA! From their mouths!

He further noted that what triggered the payment to Freddie was the write-off of certain deferred tax assets.
Mr. Dacey went on to explain that at the end of the day, the preferred stocks (subject to valuation write-downs) will be on the federal government’s balance sheet. At this point, Mr. Steinberg asked whether or not it was possible for the Federal government to financially benefit from these transactions. Mr. Lingebach stated yes, but noted only to the extent that the GSE’s do well going forward.

TREASURY NOTES: YES conservatorship will be profitable to the Government!

Mr. Farrell inquired that if Treasury recorded this as an expense, did the GSE’s as a result book this as income/revenue or possibly as an accounts receivable. Mr. Lingebach replied that the GSE’s booked these transactions directly to equity. Mr. Farrell then asked that if at the end of the fourth quarter the GSE’s show assets to be greater than liabilities; would they be required to pay the federal government back? Mr. Lingebach replied in the negative stating that there is no repayment provision.

TREASURY NOTES: NO, the GSE’s do not record DTA as a POSITIVE in accounting! But the Treasury knows they are there!! if the GSE assets became greater than liabilities would they be required to pay back? NO he answers. This was known in 2008 that if the GSE's became profitable the government would not be paid back, so in 2012 a new plan was hatched to SWEEP the Market cap of each company. Proof the government not only knew the DTA was there but months before the SWEEP was enacted they did the exact same to AIG and reversed the DTA and paid off the government. The SWEEP insured that Fannie and Freddie would not be doing this since the SPSA has a provision for paying off the SPSA with CASH!! The same cash that the Sweep required to be paid to Treasury as dividend instead of payoff. The size of each payment made would have continually reduced the 10% interest the Treasury was charging to the point of paid off. No one makes a $65 billion payment on $117 billion loan and then keeps paying interest on $117 billion. The interest payment would drop by 1/2 and continue downward as payments came in to pay down the SPSA. 

After Treasury ‘s explanation, Mr. Patton then asked to review the language on page 3 of the referenced position paper specific to the journal entry language. Mr. Lingebach confirmed that the language should have been revised to read that the debit would be to an expense and not to a deferred asset. For clarification purposes, Mr. Dacey noted that the asset belongs to the general fund and the expense is incurred by Treasury. Mr. Jackson then added that this is because appropriated funds were being used and that in
essence, the transaction nets out to a zero-sum noting that the liability is basically “repaying” the appropriation.
TREASURY NOTES: The Loaned money costs TAXPAYERS NOTHING! zero-sum




Tuesday, May 5, 2015

Watt is separating from his party, Fannie mae #FannieGate

But the Federal Housing Finance Agency, which operates independently of the Obama administration, believes current caps on pay limit the firms' ability to "develop reliable CEO succession plans," FHFA Director Mel Watt said in a statement.

What is going on? SUCCESSION PLANS? Fannie and Freddie will be bankrupted by the US TREASURY within 2 years! What succession is needed, UNLESS.... FHFA knows that Fannie will be here long after FHFA Watt is replaced? Both white house and congress seem to be very angry about this. Why Now, why allow a pay raise? I think it is to prove that Watt is independent and NO ONE can tell him what to do. This is important for when the next President is elected. If it is a republican, all of Watts work will be undone by the next administration. But there is NO WAY the democrats are going to let affordable housing and the 30 year mortgage go away in this country. Fannie Mae was started by democrats! FDR to be precise! 
Democrats used the NUCLEAR option to put Watt in the FHFA! Why? Demarco was not running Fannie mae the way the Democrats wanted him. Enter Watt, a Liberal democrat to the core! 
Again:
new leases on new buildings for 10 years. 
New CEO compensation. 
Affordable housing funded. 
30 year mortgage preserved. 
No changes to G Fees
Watt halted a succession of fee increases implemented by his predecessor to shrink the government-sponsored enterprises’ footprint in the mortgage market. Even with the changes, fees on average remain about twice 2009 levels.
And
It seems to me that Fannie and Freddie are now paying MUCH less to treasury and 
Booking losses on derivatives that can be regained at a later date, but why now in 2015?
is it because Fannie will be a Free company again? Law suit pressure? 
Follow HERA Watt. Its the Law, not the SPSA. 
The SPSA 3rd amendment as signed by Demarco is against the LAW!
Self dealing is still illegal in America! 
NONE THE LESS, I SAY GOOD JOB MR WATT SO FAR!
 
White house:
“The reason these entities are different than some of the financial entities you see in the private sector is they benefit significantly from a backstop that is provided by the taxpayer,” White House press secretary Josh Earnest told reporters Tuesday at a briefing in Washington.

Democrat and Republican senators:

Representative Ed Royce, a California Republican, said in a statement that the potential change could allow the CEOs to make more than $7 million annually and would be “absolutely unconscionable.” He’s planning to introduce a bill Friday to prevent the pay increases. Senator Mark Warner, a Virginia Democrat, said in statement that the plan showed that it’s “long past time for Congress to fix this flawed business model and enact responsible reforms to our housing finance system.”

Treasury:

The Treasury Department “has consistently communicated to FHFA that a change in CEO compensation at Fannie Mae and Freddie Mac is not appropriate, given that taxpayers continue to backstop both enterprises,” Adam Hodge, a spokesman, said in an e-mail. “Ultimately, FHFA, not Treasury, has sole authority over executive compensation at Fannie Mae and Freddie Mac. Nonetheless, Treasury strongly recommends that FHFA continue its existing limits on CEO compensation.”


WASHINGTON, May 5 (Reuters) - The regulator of mortgage finance firms Fannie Mae and Freddie Mac could allow them to raise the pay of their chief executives in order to keep and attract talent at the government-controlled entities, company officials said on Tuesday.
Pay hikes at the top of the two firms are opposed by the U.S. Treasury on grounds that taxpayers continue to backstop the two firms after the government bailed them out in 2008 during the financial crisis.
But the Federal Housing Finance Agency, which operates independently of the Obama administration, believes current caps on pay limit the firms' ability to "develop reliable CEO succession plans," FHFA Director Mel Watt said in a statement.
Freddie Mac and Fannie Mae said they were told by the FHFA they could submit new proposals for executive pay at the firms.
Freddie Mac said in a filing to the Securities and Exchange Commission on Tuesday that the FHFA specified that the firm should not propose a pay increase that would put pay "higher than the 25th percentile of the market."
Egbert L.J. Perry, non-executive chairman of Fannie Mae's boards of directors, said the FHFA communication was "an important and necessary step" for retaining and attracting talented executives.
While FHFA has sole authority over executive compensation at Freddie Mac and Fannie Mae, the Obama administration made clear it wants to keep salary caps in place.
"(The) Treasury strongly recommends that FHFA continue its existing limits on CEO compensation," said Treasury spokesman Adam Hodge.