FMCC - Freddie Mac

Other OTC - Other OTC Delayed Price. Currency in USD
3.7000
-0.1000 (-2.63%)
At close: 4:00PM EDT
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Previous Close3.8000
Open3.7600
Bid0.0000 x 0
Ask0.0000 x 0
Day's Range3.7000 - 4.0400
52 Week Range0.9800 - 4.0400
Volume12,492,481
Avg. Volume3,062,223
Market Cap2.405B
Beta (3Y Monthly)2.80
PE Ratio (TTM)N/A
EPS (TTM)-0.2500
Earnings DateOct 29, 2019 - Nov 4, 2019
Forward Dividend & YieldN/A (N/A)
Ex-Dividend Date2008-06-12
1y Target Est4.00
Trade prices are not sourced from all markets
  • GlobeNewswire

    Freddie Mac Single-Family CRT Hits $50 Billion of Credit Risk Transferred

    MCLEAN, Va., Sept. 17, 2019 -- Freddie Mac today announced that its Single-Family Credit Risk Transfer (CRT) programs have surpassed the $50 billion mark in transferring credit.

  • FX Empire

    U.S Mortgage Rates Rise as Geopolitical Risk Abates

    Mortgage rates climbed last week as the trade war and Brexit jitters eased. It’s all in the hands of the FED this week.

  • Don’t Mess With Fannie Mae and Freddie Mac
    Bloomberg

    Don’t Mess With Fannie Mae and Freddie Mac

    (Bloomberg Opinion) -- It’s official: The Trump administration has a plan to deal with mortgage giants Fannie Mae and Freddie Mac — by returning them to the same quasi-governmental form that set them up for failure in the 2008 financial crisis. If executed, it’s likely to be a win for a small coterie of hedge funds, and a big loss for everybody else.Fannie Mae and Freddie Mac play a central role in U.S. housing finance. By guaranteeing payments of interest and principal on home loans (in return for a fee), they make the ubiquitous 30-year mortgage possible. For decades, they operated as a public-private hybrid. Their congressional charter to promote homeownership created a perception of government backing, which allowed them to get by with extremely little capital and deliver outsize profits to their private shareholders. The perception became reality after the housing bust, when they suffered overwhelming losses and the government had to rescue them at taxpayer expense.Since then, as wards of the state, Fannie Mae and Freddie Mac have actually done quite well. They have supported lending throughout the recession and recovery, boosted fees to better cover their risks, and paid more than $300 billion in dividends to the Treasury. Yet a rump of private shareholders, including hedge funds that have bought in since the crash, keeps clamoring for a piece of the profits. And legislators keep coming up with — and failing to agree on — sweeping plans to reform the companies and reduce the government’s involvement in the mortgage market.Now, in the absence of congressional action, President Donald Trump’s administration might go it alone. Its plan, released last week by the Treasury, is to put the companies back into private hands, but this time with an explicit government backstop. This means the companies would retain more of their earnings — potentially a huge windfall for the private shareholders. The resulting structure would be much the same as before the crisis: Shareholders would reap profits until the next housing bust, when taxpayers would again be on the hook — only more firmly than last time — to cover losses.Granted, the Treasury plan does call for shareholders to take on more risk in the form of added equity capital. It also requires the government to charge a fee large enough, supposedly, to compensate taxpayers for providing a backstop. This was how the old system was meant to work, and it failed. Such a setup gives the private shareholders every incentive to press for low fees and light capital requirements. Experience suggests they’re very likely to get their way.There are better options. For example, Fannie Mae and Freddie Mac could be merged into a single, fully government-owned corporation that would transfer most of its credit risk to private investors, retaining just the catastrophic risk that only the government can bear. This would get private capital involved without letting it so easily shift risk to taxpayers. Pricing the guarantee correctly would be easier. This in turn would promote more competition from completely private lending channels. As it happens, Fannie Mae and Freddie Mac have already been moving in this direction, issuing special credit-risk-transfer securities and creating a common mortgage-securitization platform.The Trump administration’s plan for Fannie Mae and Freddie Mac still has a long way to go. There are many details to iron out and various political forces to align. As the idea moves forward, one can only hope that inertia will prevail: Doing nothing would be better than this.\--Editors: Mark Whitehouse, Clive Crook.To contact the senior editor responsible for Bloomberg Opinion’s editorials: David Shipley at davidshipley@bloomberg.net, .Editorials are written by the Bloomberg Opinion editorial board.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Deutsche Bank Emerges as Whistle-Blower in Bond-Rig Probe
    Bloomberg

    Deutsche Bank Emerges as Whistle-Blower in Bond-Rig Probe

    (Bloomberg) -- Deutsche Bank AG is cooperating with the Justice Department’s antitrust investigation into whether several of the largest global banks conspired to rig trading in unsecured bonds issued by Fannie Mae and Freddie Mac.The bank earned leniency by providing information about other banks accused of rigging trading in the bonds. The cooperation deal emerged Thursday when Pennsylvania’s Treasurer, Joe Torsella, announced that Deutsche Bank had agreed to pay $15 million to resolve allegations in a civil lawsuit filed in federal court in Manhattan, that accuses traders at about a dozen large banks of rigging the bond prices.According to the deal, the German lender came forward in May to assist Pennsylvania and other plaintiffs in the civil lawsuit. Under federal law, companies seeking criminal leniency in antitrust matters, which includes immunity from prosecution, can also limit their financial exposure by assisting price-fixing victims seeking damages.Deutsche Bank’s settlement, which requires the bank to install an antitrust compliance program, shows that the bank has been providing the Justice Department with electronic chats and other evidence that could be used to prosecute individuals and institutions. It also suggests that the bank, which is the middle of multiple criminal investigations by the Justice Department, is looking to win some good will with investigators.In late May, lawyers accusing the banks of manipulating the bond prices said in a court filing that they were working with a cooperator who was providing “smoking gun” evidence including electronic chats. Though they didn’t name Deutsche Bank at the time, examples of chats in the filing were between traders at Deutsche Bank and others at Goldman Sachs Group Inc., Morgan Stanley and BNP Paribas SA.The lawsuit accuses financial institutions of ripping off pension funds and others from 2009 to 2016.Torsella said the settlement on Thursday was “an important first step, but just a first step, toward greater accountability on Wall Street.” He said government-sponsored-entity (GSE) bonds like those of Fannie Mae and Freddie Mac “are foundational to public investment portfolios, particularly for state governments, school districts, county governments and local municipalities.”“We’re pleased to have resolved the matter,” said Troy Gravitt, a Deutsche Bank spokesman.The Justice Department opened a criminal investigation into whether some traders manipulated prices in the market for unsecured bonds issued by Fannie and Freddie, the government-backed companies whose financing underlies most U.S. home purchases, Bloomberg News reported last year. No individuals or banks have been charged.The market for their agency debt -- which finances the companies’ operations but doesn’t directly fund mortgages -- runs into the hundreds of billions of dollars.The lawsuit in Manhattan alleges that the chats about the pricing of the bonds in the secondary market also directly implicate Bank of America Corp. and its Merrill Lynch subsidiary, Barclays Plc, Cantor Fitzgerald LP, Citigroup Inc., Credit Suisse Group AG, First Tennessee Bank NA, HSBC Holdings Plc, JPMorgan Chase & Co., Nomura Holdings Inc., TD Securities Inc. and UBS Group AG.In addition to Fannie Mae and Freddie Mac, these GSE bonds finance the Federal Farm Credit Banks and the Federal Home Loan Banks.Deutsche Bank approached the lead counsel for the plaintiffs on May 8 and said it was willing to provide them with cooperation materials pursuant to a federal law that allows companies to seek criminal leniency in antitrust matters, the settlement agreement said. The law also limits the financial exposure of companies that assist price-fixing victims seeking compensation.Judge Jed Rakoff in federal court in Manhattan ruled this month that the case against BNP Paribas, Deutsche Bank, Goldman Sachs, Merrill Lynch and Morgan Stanley could move forward. He dismissed the other financial institutions from the case but allowed the plaintiffs to seek to bring additional evidence forward that could bring those institutions back in to the case, which they did in a filing on Tuesday.Earlier:Wall Street Informant Turned Over Chats in Fannie Bond CaseWall Street’s Legal Nemesis Is Sidelined in Fannie Rigging CaseFannie Bond-Rigging Suit Lists 27 Traders Without Accusing ThemTrading in Fannie, Freddie Bonds Said to Be Probed by U.S.(Updates with bank assisting criminal investigation in fourth paragraph.)\--With assistance from Gwen Everett.To contact the reporter on this story: Tom Schoenberg in Washington at tschoenberg@bloomberg.netTo contact the editors responsible for this story: Jeffrey D Grocott at jgrocott2@bloomberg.net, David S. JoachimFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • GlobeNewswire

    Freddie Mac Prices $1.2 Billion Multifamily K-Deal, K-097

    MCLEAN, Va., Sept. 12, 2019 -- Freddie Mac (OTCQB: FMCC) recently priced a new offering of Structured Pass-Through Certificates (K Certificates), which are backed by underlying.

  • Deutsche Bank is first to settle bond-rigging lawsuit, amid federal probe
    Reuters

    Deutsche Bank is first to settle bond-rigging lawsuit, amid federal probe

    Deutsche Bank AG will pay $15 million to resolve claims it conspired to rig prices of bonds issued by Fannie Mae and Freddie Mac , becoming the first of 16 financial services companies to settle litigation by investors. The German bank did not admit wrongdoing in agreeing to the settlement, which also requires that it bolster its antitrust compliance procedures and cooperate with the investors. The settlement was disclosed in filings late Wednesday in Manhattan federal court.

  • GlobeNewswire

    Mortgage Rates Increase

    Freddie Mac (FMCC) today released the results of its Primary Mortgage Market® (PMMS®), showing that the 30-year fixed-rate mortgage (FRM) rate averaged 3.56 percent. While this is an increase from last week, this is the first time 30-year fixed mortgage rates have been under 3.6 percent over four consecutive weeks since the fourth quarter of 2016. Sam Khater, Freddie Mac’s Chief Economist says, “Pipeline purchase demand continues to improve heading into the late fall with purchase mortgage applications up nine percent from a year ago.

  • GlobeNewswire

    Freddie Mac Prices $718 Million Multifamily K-Deal, K-F67

    Freddie Mac (FMCC) recently priced a new offering of Structured Pass-Through Certificates (K Certificates) backed by floating-rate multifamily mortgages with ten-year terms. The approximately $718 million in K Certificates (K-F67 Certificates) are expected to settle on or about September 24, 2019.

  • Bloomberg

    Hedge Funds Get a Crack at Weakening the Administrative State

    (Bloomberg Opinion) -- It’s not often that hedge funds and the Constitution come up in the same sentence — let alone the same judicial opinion. But the two are very much in play in an important opinion issued by the U.S. Court of Appeals for the Fifth Circuit.In it, the court handed a win to hedge funds that are challenging the 2012 decision by the Federal Housing Finance Agency to make Fannie Mae and Freddie Mac transfer their profits to the U.S. Treasury in perpetuity — a transformation of those previously quasi-private entities known as the net worth sweep.At the same time, the court also held that it was unconstitutional for Congress to make the head of the FHFA removable by the president only for cause.These two separate parts of the court’s decision are independently important. Both or one or neither could eventually reach the Supreme Court.One is based on the interpretation of the statutes creating the FHFA. The other is based on the Constitution. In principle, you could be interested in one and ignore the other.But that would be a grave mistake. What’s most interesting about these two parts of the opinion is that they are ideologically connected, even if they are on the surface legally independent.Both parts reflect the rise of a strand of conservative judicial thought that questions the very foundations of the administrative state — and thus of agencies like the FHFA. The judges who subscribe to this approach are inclined to limit the powers of agencies to make substantive policy decisions like the net worth sweep, which fundamentally changed the character of Fannie Mae and Freddie Mac. The very same judges, following the same approach, also oppose agency independence of the kind that Congress creates when it makes an agency head removable only for cause.This trend is something you need to be aware of whether you’re someone who makes a living trading in regulated markets or someone who cares about how the courts are re-configuring the constitutional structure of the administrative state.To explain the connection between the two parts of the case, let me briefly simplify (or really, oversimplify) what the appeals court did.With respect to the net worth sweep, the court said that the FHFA’s statutory powers as receiver and conservator of Fannie Mae and Freddie Mac did not authorize the agency to transfer substantially all the capital of the two entities into the Treasury. In essence, the court said, it was lawful for the FHFA to bail out the two government-sponsored enterprises, and lawful for Treasury to take a hefty fee for doing so. But the net worth sweep, the court said, was really a liquidation of Fannie Mae and Freddie Mac’s assets -- and that liquidation went beyond the powers granted by Congress.To reach this conclusion required an extremely cramped and narrow reading of the statutes that created the FHFA. Several other courts of appeal have rejected challenges to FHFA authority based on analogous arguments. By its own account, the Fifth Circuit has now created a split with at least two of the circuits. Such circuit splits can eventually lead to the Supreme Court weighing in to decide the issue.What seems to have motivated the court is that the net worth sweep amounted to a serious policy decision about the future of Fannie Mae and Freddie Mac. The court reasoned that the point of the net worth sweep was to block the possibility that Fannie and Freddie could ever go private again. In the court’s telling, this policy goal wasn’t consistent with the FHFA’s powers.But under traditional administrative law principles, agency powers to make substantive policy decisions are typically treated with significant deference by the courts.  If the FHFA is a receiver and a conservator for Fannie and Freddie, that would ordinarily be enough to let it make major, permanent changes to their structure and business model.In short, what motivated the Fifth Circuit’s ruling on the net worth sweep was a revisionist, conservative theory of administrative law — one that seeks to interpret agencies’ authorities much more narrowly than in the past.That same ideological turn with respect to the administrative state was also more obviously visible in the court’s constitutional ruling about whether Congress can make the FHFA an independent agency by protecting its director from presidential removal except for cause. Without getting into the constitutional precedent, the gist is that until now, the Supreme Court has been willing to uphold the creation of so-called independent agencies, run by heads who are appointed by the president but who cannot be removed except for cause.The Fifth Circuit said that the FHFA enjoyed a “unique constellation of insulating features” that made its independence a violation of the separation of powers. This was based on a highly dubious interpretation of a 2010 Supreme Court opinion, Free Enterprise Fund  v. Public Company Accounting Oversight Board.Essentially, the Fifth Circuit was making new constitutional law to the effect that an independent agency can’t be too independent. Again, this view creates a split between different appeals courts, and may have to go to the Supreme Court for resolution.The ideological basis for this attack on independent agencies is grounded in the idea that the Framers’ three-branch structure of government can’t be expanded to include independent agencies, which the conservatives like to call a “headless fourth branch” that is not accountable to voters. Justice Neil Gorsuch is leading the push for a rollback of administrative structures like independent agencies that he considers unconstitutional. There’s a lively and growing debate among scholars of administrative and constitutional law about how far Gorsuch can take the counter-revolution against the administrative state.The takeaway from the Fifth Circuit opinion is that this isn’t just some abstract debate among scholars about the future of constitutional law. It’s a debate whose gravitational pull extends to big-ticket litigation brought by hedge funds making predictions that are linked to its outcome. It represents that rarest of situations: when you can trade on the meaning of the Constitution.To contact the author of this story: Noah Feldman at nfeldman7@bloomberg.netTo contact the editor responsible for this story: Sarah Green Carmichael at sgreencarmic@bloomberg.netThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Noah Feldman is a Bloomberg Opinion columnist. He is a professor of law at Harvard University and was a clerk to U.S. Supreme Court Justice David Souter. His books include “The Three Lives of James Madison: Genius, Partisan, President.” For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.

  • Hedge Funds Left Dizzy by Mnuchin’s Fannie-Freddie Musings
    Bloomberg

    Hedge Funds Left Dizzy by Mnuchin’s Fannie-Freddie Musings

    (Bloomberg) -- Hedge funds and other investors in Fannie Mae and Freddie Mac got more mixed messages from the Trump administration Tuesday, adding to the whipsaw trading sessions that have dazed shareholders in recent days.Treasury Secretary Steven Mnuchin, laying out next his steps on Fannie and Freddie, made clear that he plans to end a controversial policy that requires the mortgage giants to send virtually all their earnings to the government.That was the good news for investors.But Mnuchin also said he opposes any “simple” recap and release -- a move hedge funds have long lobbied for that would consist of building up Fannie and Freddie’s capital buffers and then freeing them from federal control. The comments, made in testimony before the Senate Banking Committee, indicate the administration’s timeline for ending the companies’ conservatorships might be longer than shareholders would like.Shares SlideEarlier Tuesday, Mnuchin also told CNBC that Treasury would consider appealing a Sept. 6 court decision that marked a major victory for investors. Fannie slid 13% to $3.38 in New York trading. Freddie also fell 13% to $3.21. It was their biggest one-day dips since January.The slumps marked a dramatic shift from Monday when both Fannie and Freddie surged more than 40%, their biggest gains in almost three years. That followed declines to close out trading last week. Even for stocks that are notoriously volatile, the past few days have been dizzying.Read More: Fannie-Freddie Fall as Trump Plan Shows Quick Windfall UnlikelySetting it in all in motion was the Sept. 5 release of the Trump administration’s long-awaited plan for fixing Fannie and Freddie, followed a day later by a court ruling that declared it was illegal for the government to hoard the mortgage giants’ profits.Fannie and Freddie don’t make loans. Instead, they buy mortgages from banks and other lenders and package them into bonds with guarantees. The companies were taken over amid the 2008 housing crash, eventually receiving $191 billion in taxpayer funds to keep them afloat. They’ve since become profitable again, paying more than $300 billion in dividends to the Treasury.Ending ConservatorshipMnuchin trekked to Capitol Hill Tuesday, along with Federal Housing Finance Agency Chairman Mark Calabria and Housing and Urban Development Secretary Ben Carson, to defend the administration’s proposal for ending the decade-long conservatorships.Read More: Trump Fannie-Freddie Plan Urges Ending Decade of U.S. RuleThe Treasury secretary said it’s essential that Fannie and Freddie have enough capital to weather another housing crash. He added that he and Calabria, the companies’ regulator, are negotiating an end to the profit sweep so they can start retaining earnings.Fannie and Freddie are currently limited to capital buffers of $3 billion apiece, far less than what they’d need outside of government control, Mnuchin said. While he declined to offer a specific number, he told lawmakers it should be “more like $100 billion than $6 billion.”Getting to the appropriate level will require raising “third-party” capital, Mnuchin said.Congressional SnipingApparent during Tuesday’s hearing is how tricky it will be for the Trump administration to navigate the politics of housing-finance reform. Ohio Senator Sherrod Brown, the banking committee’s top Democrat, said Treasury’s plan is a non-starter.Read More: Trump’s Fannie-Freddie Plan Gets GOP Favor and Democrats ScornWhile Mnuchin and Calabria said they are willing to take steps on their own, they would like to see Congress take the lead on major changes.There are some policy changes Treasury is calling for, like an explicit federal guarantee of the mortgage bonds that Fannie and Freddie issue, that would require congressional action. Lawmakers would also have to approve the chartering of other companies to compete with Fannie and Freddie, a top priority for Treasury.(Adds closing share prices in fourth paragraph.)To contact the reporter on this story: Elizabeth Dexheimer in Washington at edexheimer@bloomberg.netTo contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, Gregory MottFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Trump’s Fannie-Freddie Plan Gets GOP Favor, Democrats’ Scorn
    Bloomberg

    Trump’s Fannie-Freddie Plan Gets GOP Favor, Democrats’ Scorn

    (Bloomberg) -- The top Republican and Democrat on the Senate Banking Committee split over the Trump administration’s plan for freeing Fannie Mae and Freddie Mac from U.S. control, a sign of the uphill battle Congress faces in overhauling housing finance.Republican Senator Mike Crapo, the banking panel’s chairman, said his preference is for lawmakers to take the lead on freeing the companies, but added that the administration should get going on reform. Senator Sherrod Brown, the committee’s top Democrat, labeled the plan a non-starter that will make housing more expensive.The remarks, made at a Tuesday hearing, are the latest sign that a bipartisan compromise isn’t likely anytime soon. That might embolden the administration to pursue its own changes, including steps to bolster Fannie and Freddie’s capital and reduce the companies’ mortgage-market dominance.Crapo encouraged such moves, arguing that they might make it easier for lawmakers to ultimately fix Fannie and Freddie, which backstop about half of the nation’s $10 trillion of home loans. The companies have been wards of the state since the 2008 financial crisis, when the housing-market crash triggered the government takeover. Lawmakers have repeatedly failed to agree on how to end the conservatorships.Trump’s Friends“Only Congress has the tools necessary to provide holistic, comprehensive reform to our system that will be durable through any market cycle,” Idaho’s Crapo said. “However, it is important for the administration to begin moving forward with incremental steps that move the system in the right direction.”Ohio’s Brown countered that the Treasury Department’s plan, released Sept. 5, would be a gift to President Donald Trump’s friends on Wall Street, and would be disastrous for U.S. home buyers.“The Trump plan will make mortgages more expensive and harder to get,” he said. It will also make it “easier for Wall Street to profit off of hard working families.”Explicit GuaranteeTreasury Secretary Steven Mnuchin, who defended his agency’s proposal at the hearing, said he remains eager for Congress to take the lead. There are some policy changes Treasury is calling for, like an explicit guarantee of Fannie and Freddie’s securities, that require congressional action. Lawmakers would also have to approve chartering other companies to compete with Fannie and Freddie, which is also called for in the Treasury report.Federal Housing Finance Agency Director Mark Calabria and Housing and Urban Development Secretary Ben Carson also testified at the hearing. They agreed with Mnuchin that they prefer Congress revamp the nation’s housing-finance system.At the same time, Mnuchin said Treasury is in talks with the FHFA, Fannie and Freddie’s regulator, on changes that don’t require legislation. Those include “removing” the so-called net worth sweep, an Obama-era policy that requires the companies to send nearly all their profits to the Treasury. Ending the sweep Would allow them to retain earnings and build up their capital buffers.‘Simple’ RecapMnuchin said he doesn’t support a “simple” recap and release of Fannie and Freddie, which is something that hedge funds and other investors have long advocated. There would likely have to be extensive negotiations over the process for freeing the companies before any capital raising initiatives -- like an initial public offering -- could take place. That could mean that a windfall for investors is still likely a ways away.Shares of Fannie fell 7% to $3.60 at 12:28 p.m. in New York. Freddie fell 8% to $3.38.Fannie and Freddie, which are currently limited to capital buffers of $3 billion apiece, will need much more than that to survive outside of government control, Mnuchin said Tuesday. While he declined to offer specifics about how much they’d need, Mnuchin told lawmakers it should be “more like $100 billion than $6 billion.”Taxpayer RescueFannie and Freddie don’t make loans. Instead, they purchase mortgages from banks and other lenders and package them into bonds. Those securities have guarantees that protect bond holders from the risk of homeowners defaulting. The process provides ample liquidity for the mortgage market, keeping the housing sector humming and borrowing rates low.The companies were taken over more than a decade ago, ultimately receiving $191 billion in bailout funds. They’ve since become profitable again, paying more than $300 billion in dividends to the Treasury in recent years.Shares of Fannie and Freddie rose the most in almost three years on Monday following comments by Mnuchin that he was nearing a deal that would let the companies retain more of their earnings to build capital buffers.Also pushing the stocks higher in recent days is a favorable legal ruling for shareholders that came late last week. On Friday, an appellate court overturned a ruling that backed the net sweep policy, a step that could give shareholders leverage in possible settlement talks over their stakes in the companies, according to analysts.(Updates with Mnuchin comments in the 11th paragraph)\--With assistance from Saleha Mohsin.To contact the reporter on this story: Elizabeth Dexheimer in Washington at edexheimer@bloomberg.netTo contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, Gregory MottFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bloomberg

    Fannie-Freddie Investors Hopeful as Senate Eyes Treasury Plan

    (Bloomberg) -- President Donald Trump’s point men on housing finance will take to Capitol Hill on Tuesday looking to sell lawmakers on their plan for freeing Fannie Mae and Freddie Mac.But with legislation unlikely to get through a divided Congress, the hearing’s top takeaway may be what it reveals about steps the officials will take on their own to end government control of the mortgage giants after more than a decade.The Senate Banking Committee will hear from Treasury Secretary Steven Mnuchin, Federal Housing Finance Agency Director Mark Calabria and Housing and Urban Development Secretary Ben Carson less than a week after Treasury released its road map for getting out of the business of running Fannie Mae and Freddie Mac.Treasury’s outline, which was in many respects a plan to create a plan, initially disappointed investors due its lack of detail. But shares rose the most in almost three years on Monday after Mnuchin said he was nearing a deal that would let the companies retain more of their earnings to build capital buffers, which has been viewed as a key step toward their eventual release. Also pushing the stocks higher was a favorable legal ruling for shareholders that came late last week.Hedge funds and other investors will be watching closely for signals from Mnuchin, who could dim their hopes just as easily as he could boost them. Here are some of the key things to look for:Calabria’s CooperationTreasury’s role in carrying out the plan is largely contingent on negotiation with the FHFA, the independent agency that regulates Fannie and Freddie. Key details, such as ending the sweep of the companies’ profits and setting up long-term access to Treasury funds, need to be approved by both agencies.It’s unclear how aligned Mnuchin’s views are with those of the FHFA’s Calabria, a libertarian economist who formerly worked for Vice President Mike Pence. Their responses to lawmakers’ questions could show whether they are unified and how far they have progressed on steps that can be taken without legislation.In his prepared remarks, Calabria said the plan is “broadly consistent with my top priorities, which are to cement FHFA as a world-class regulator and to restore Fannie Mae and Freddie Mac to safe and sound condition by building capital to match their risk profile.”Timing QuestionsTreasury’s report largely avoided giving specific timing for major policy decisions, but it indicated that Congress would be given the chance to come up with its own plan before sweeping administrative steps are taken.Senators will likely press for specifics from Calabria and Mnuchin, who said in a Monday television interview that he hopes to work with lawmakers over the next three to six months but is “perfectly comfortable” with the idea of moving without them.Legal ReactionFannie and Freddie investors won a big victory on Friday in their quest to end the so-called net worth sweep that has seen nearly all of the companies’ profits turned over to Treasury since 2012. An appellate court overturned a ruling that backed the policy, a step that could give shareholders leverage in possible settlement talks over their stakes in the companies, according to Compass Point’s Chris Gamaitoni.Any indication that Treasury or the FHFA has entered or might enter negotiations with investors would be welcome news to the hedge funds that have waited years for their post-crisis bets on the companies to pay off.Democratic FuryWhile Treasury’s proposals were almost uniformly criticized by Democrats, it’s unclear how much political capital party members are willing to use in opposing Mnuchin’s plan. Presidential contender Elizabeth Warren called the plan “shameful” in a statement last week, but the Massachusetts senator is unlikely to appear at the hearing, as she has a campaign rally in Austin, Texas, scheduled for later in the day.If Democrats do choose to make a lot of noise on the issue, either on Capitol Hill or on the campaign trail, the Trump administration could become more wary of moving quickly.Conservative DivisionsRepublicans have been split on housing-finance reform, with hard-line conservatives seeking to end government involvement in the mortgage market and moderates trying to bring in new guarantors to compete with Fannie and Freddie.Tuesday’s hearing could give an indication of whether there is potential for unity on the GOP side and whether there’s a chance of finding common ground with Democrats who have opposed past efforts by Republicans to scuttle the companies’ historic affordable housing goals.Senator Mike Crapo, the Idaho Republican who leads the banking panel, has said he would prefer that Congress play a role in overhauling the housing-finance system, but expressed approval of the administration taking some action on its own. Outside of Crapo, it’s unclear if there’s enough urgency to pass reform legislation, potentially leaving the administration to act on its own.To contact the reporter on this story: Austin Weinstein in Washington at aweinstein18@bloomberg.netTo contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, Gregory MottFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Fannie, Freddie Soar as Hedge Funds Score Wins on Two Fronts
    Bloomberg

    Fannie, Freddie Soar as Hedge Funds Score Wins on Two Fronts

    (Bloomberg) -- Fannie Mae and Freddie Mac soared the most in almost three years Monday as hedge funds that have long hoped to make a windfall on their investments in the mortgage giants got a double-dose of good news.First, shareholders won an important legal victory after markets closed Sept. 6 that gave them renewed optimism of getting their hands on billions of dollars in company profits that now go to the government.Then, Treasury Secretary Steven Mnuchin said early Monday that he will soon reach a deal that allows Fannie and Freddie to hold on to some of their earnings, so they can start rebuilding their capital buffers.The step is considered crucial in eventually freeing the companies from federal control, which has been their status since the 2008 financial crisis. That’s because Fannie and Freddie are currently restricted from holding more than $3 billion in capital apiece, far short of what they would need to weather another housing crash as private companies.Fannie jumped 43% to $3.88 in New York trading, the biggest one-day gain since November 2016. Freddie surged 43% to $3.67, also its biggest rise in almost three years.Among investors benefiting from the gains are some of the biggest names in finance, including John Paulson, Bill Ackman’s Pershing Square Capital Management and Blackstone Group Inc.Read More: Fannie-Freddie Soar as Wall Street Hails Court Win, Mnuchin PlanTreasury is “in the process of negotiating” a plan for Fannie and Freddie to retain earnings with the Federal Finance Housing Agency, Fannie and Freddie’s regulator, Mnuchin said Monday in an interview with Fox Business. “We expect a near-term agreement to retain their earnings,” he said.Revamping SweepFor Fannie and Freddie to hold on to their earnings, Treasury and FHFA would have to halt or revamp a controversial policy implemented in 2012 during the Obama administration, known as the net worth sweep, that requires the companies to send virtually all their profits to the Treasury.Hedge funds and other investors that own Fannie and Freddie shares have long fought to end the sweep through litigation, claiming it was illegal. The shareholders won a big victory Sept. 6 when a panel of federal appeals court judges overturned a lower ruling that had backed the government’s right to take all of the mortgage giants’ profits.Read More: Fannie-Freddie Investors Fighting Profit Sweep Get Key WinThe Fifth Circuit appeals court judges, based in New Orleans, also concluded last week that the structure of the FHFA is unconstitutional. Investors still face many hurdles, as the decision just kicks the case back to the lower court. Many other federal courts have ruled against the shareholders, making it more likely that an appeal could ultimately be heard by the Supreme Court if the case isn’t settled before then.Litigating ShareholdersFannie and Freddie don’t lend money to home buyers. Instead, they purchase mortgages from banks and other lenders and package them into bonds. Those securities have guarantees that protect investors from the risk of borrowers defaulting. Fannie and Freddie backstop nearly half of the U.S.’s $10 trillion of home loans, a process that keeps the mortgage market harming and borrowing rates low.Fannie and Freddie were put into federal conservatorship in 2008 as the housing market cratered and were sustained by taxpayer aid. They have since started making money again and paid $115 billion more in dividends to the Treasury, through the net profit sweep, than they received in bailout funds.Assuming that Fannie and Freddie would eventually released, hedge funds started buying their shares for pennies in the years after the crisis. Paulson & Co., Pershing Square and Blackstone Group’s GSO Capital were among those who got in on the trade.Until now, shareholders have mostly suffered setbacks in their attempts to overturn the profits sweep. Their Sept. 6 win follows what also might be a watershed moment in Fannie and Freddie getting out of the government’s grip: the release of a Treasury report a day earlier that outlines the Trump administration’s plan to end the conservatorships.Treasury ReportThe Treasury document laid out dozens of suggested reforms to protect Fannie and Freddie from another housing crash, shrink their dominant market shares and create new competitors to the companies. Yet, it is only an initial step in what still would be a long and arduous road to freeing the companies from the government’s grip.The Treasury Department’s proposal left much to be ironed out, signaling many of the suggested changes may not come until after the 2020 presidential election. And if a Democrat beats President Donald Trump next year, the overhaul would likely be scrapped all together.Mnuchin said Monday that while he hopes to work with Congress to implement changes to Fannie and Freddie over the next three to six months, he is “perfectly comfortable” making administrative fixes if necessary. Only Congress can create competitors to Fannie and Freddie. But there is much the Trump administration can do on its own with FHFA, including ending the profit sweep.If Fannie and Freddie start retaining earnings, it would still take them years to build up adequate capital to offset big losses. That’s why most officials believe the companies will also have to raise money through other means, such as share sales. In conservatorship, the companies lack of capital hasn’t been much of an issue because they have access to about $250 billion in Treasury funds.Senate HearingThe Treasury secretary will testify tomorrow on the administration’s plan before the Senate Banking Committee. Joining Mnuchin will be FHFA Director Mark Calabria and Housing and Urban Development Secretary Ben Carson.The officials are expected to face aggressive push back for Democratic lawmakers, who are concerned that the administration’s proposals will do more to help hedge funds than assist consumers in getting loans, particularly lower-income buyers.(Adds closing share prices in fifth paragraph.)\--With assistance from Josh Wingrove.To contact the reporters on this story: Saleha Mohsin in Washington at smohsin2@bloomberg.net;Austin Weinstein in New York at aweinstein18@bloomberg.netTo contact the editors responsible for this story: Alex Wayne at awayne3@bloomberg.net, Jesse Westbrook, Gregory MottFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Wall Street Hails Fannie-Freddie Court Win, Mnuchin Plan
    Bloomberg

    Wall Street Hails Fannie-Freddie Court Win, Mnuchin Plan

    (Bloomberg) -- Fannie Mae and Freddie Freddie Mac surged to their highest levels since February 2017 as analysts weighed in with an optimistic assessment after a double blast of good news rekindled this year’s rebound.Fannie and Freddie shares both rallied as much as 35%, reaching session highs in afternoon trading, after Treasury Secretary Steven Mnuchin said he expects a deal on the government-sponsored enterprises retaining earnings soon and as Compass Point upgraded them after shareholders won in court. With Monday’s gains, both stocks have more than doubled this year.A sense of “urgency” is taking hold in Washington after federal appeals court judges overturned a ruling that backed the government’s right to take all of the companies’ profits and concluded that structure of the Federal Housing Finance Agency, or FHFA, which regulates the two mortgage giants, is unconstitutional, Compass Point analyst Isaac Boltansky said by email. That urgency was evident during Mnuchin’s interview with Fox Business where he stated that “now is the time to recapitalize” the GSEs, Boltansky said.Investors and analysts will keep a close eye on testimony from Mnuchin and FHFA director Mark Calabria on housing finance reform at a Sept. 10 Senate Banking Committee hearing.Here’s a sample of some of the latest commentary:Compass Point, Isaac Boltansky“If the ruling stands, then the election next November stands as a de facto deadline for administrative action and nothing catalyzes action in Washington quite like a deadline,” Boltansky said. “As we see it, the near-term road map is becoming clearer with a letter agreement allowing some degree of capital retention as early as this month, a PSPA amendment in the fourth quarter or first quarter of 2020, and additional administrative steps in 2020.” PSPA refers to “senior preferred stock purchase agreements.”Earlier, Compass Point raised Fannie and Freddie common shares to buy from neutral after the Fifth Circuit decision delivered shareholders a “significant victory that will almost certainly influence the forthcoming administrative reform effort,” analyst Chris Gamaitoni wrote in a note.Bloomberg Intelligence, Elliott Stein“Though Mnuchin wouldn’t comment on the court case, we think the Sept. 6 court ruling in the 5th Circuit undercuts the legality of the sweep of Fannie Mae and Freddie Mac profits to Treasury, while boosting GSE shareholders’ leverage in anticipated negotiations to end it and eliminate some or all of Treasury’s senior preferred liquidation preference. The decision also makes it easier for a president to fire the FHFA and CFPB director without cause.”KBW, Brian GardnerThe court decision was only a “partial victory for GSE shareholders,” Gardner cautioned in a note. “Despite being one of the shareholders’ few wins in court, we urge investors not to overreact to the headlines.”That’s because “the decision was a mixed bag and increases the chances that the litigation reaches the U.S. Supreme Court since there apparently will be a split among different federal appellate courts -- something the Supreme Court will want to resolve.”“The case is still far from settled and we think the government could still prevail on the merits,” he said.Cowen, Jaret Seiberg“Tuesday’s Senate Banking hearing is the critical next step in the push for Fannie and Freddie to exit conservatorship,” Seiberg wrote. “We will watch the reaction of Democrats, especially if Elizabeth Warren attends.”“That becomes even more important as the Fifth Circuit decision on Friday gives a new president the right to replace the FHFA director. So a Democratic win in 2020 could impact recap and release.”“Recap and release” refers to the process of bolstering Fannie and Freddie’s ability to absorb losses and then returning them to private shareholder ownership.(Updates share trading in second paragraph.)To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.netTo contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Richard RichtmyerFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • GlobeNewswire

    Freddie Mac Prices $1.2 Billion Multifamily K-Deal, K-736

    MCLEAN, Va., Sept. 09, 2019 -- Freddie Mac (OTCQB: FMCC) recently priced a new offering of Structured Pass-Through Certificates (K Certificates), which are backed by underlying.

  • Fannie Mae and Freddie Mac Are Soaring on Monday -- Here's Why
    Motley Fool

    Fannie Mae and Freddie Mac Are Soaring on Monday -- Here's Why

    The Treasury just boosted shareholders' hopes that the companies could become privately held again.

  • Bloomberg

    Fannie Mae, Freddie Mac Rally on Mnuchin, Court Victory

    (Bloomberg) -- Shares of Fannie Mae soared as much as 27% in early Monday trading, to the highest intraday since February 2017, while Freddie Mac rose as much as 26%, after Treasury Secretary Steven Mnuchin said he expects a deal on the companies retaining earnings soon and as shareholders prevailed in a court ruling. Mnuchin, speaking on Fox Business, said he is “perfectly comfortable” making administrative changes if Congress doesn’t act on housing reform; said timeline for congressional action on Fannie Mae and Freddie Mac is three to six monthsNOTE: Mnuchin and Federal Housing Finance Agency director Mark Calabria are due to testify on housing finance reform at a Sept. 10 Senate Banking Cmte hearing; see Sept. 4 story: Senate Hearing Good for Fannie, Freddie Shift, Cowen SaysEarlier, Compass Point raised Fannie Mae and Freddie Mac common shares to buy from neutral after a Fifth Circuit decision delivered shareholders a “significant victory that will almost certainly influence the forthcoming administrative reform effort,” analyst Chris Gamaitoni wrote in a noteNOTE: Sept. 6, Fannie Mae, Freddie Mac investors got a win in their battle to reap benefits from stakes in the mortgage giants with a court ruling letting them pursue claims that the U.S. sweep of the companies’ earnings is illegalPanel of federal appeals court judges in New Orleans overturned ruling that backed the government’s right to take all of the companies’ profits; the judges also concluded that the structure of FNMA/FMCC’s regulator, the Federal Housing Finance Agency, is unconstitutional because of job protections for the agency’s directorRead more: Fannie-Freddie Investors Fighting Profit Sweep Get Key Win“We believe the result adds a sense of urgency to recognize that the GSEs have repaid the government, move toward a recapitalization plan to formalize operational restrictions, and increases the likelihood of the GSEs receiving compensation for their overpayment of the original terms of the PSPA”: Gamaitoni“GSE shareholders have lost on numerous claims in numerous courts around the country, but the timing of this victory – which comes less than a day after the Trump administration released its mortgage finance reform plan – has a multiplier effect on its impact. The Collins decision is a significant victory for GSE shareholders at a pivotal time in the reform process, which we believe will accelerate efforts to end the conservatorships”NOTE: GSE, or government sponsored entity, refers to Fannie and Freddie, while PSPA refers to “senior preferred stock purchase agreements”If the decision holds, Gamaitoni said, the GSEs may be able to recapitalize themselves “in a reasonable time frame”Sees a “reasonable remedy for shareholders” related to the net worth sweep as a “seminal event”Est. current fair value for FNMA of $6-$8.50 ($9-$13 by end of 2021), and for FMCC of $4.25-$8.25 ($6-$12 by end of 2021); sets FNMA PT at $7.75, FMCC at $7, representing the “more conservative scenario whereby excess payments to the U.S. Treasury are returned/credited”FNMA soared 156% YTD before Monday, FMCC added 142%, amid investor optimism change is comingNOTE: Sept. 6, Wall Street Casts Skeptical Eye on Trump Fannie-Freddie Plan(Updates share trading in first paragraph. Adds note about Mnuchin testimoney in second bullet.)To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.netTo contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper, Morwenna ConiamFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Investing.com

    Newsbreak: FNMA Surges as Mnuchin Signals End to Profit-Sweep

    Investing.com -- Shares in Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC) both surged in premarket trading after Treasury Secretary Steven Mnuchin said the government is close to an agreement that would allow the two mortgage giants to retain their own earnings and end the government's decade-long practise of draining profits to pay for their bailout since the 2008 crisis.

  • Investing.com

    Stocks: Freddie Mac, Fannie Mae, AT&T All Surge in Premarket

    Investing.com -- Stocks in focus in premarket trade on Monday, 9th September.

  • FX Empire

    U.S Mortgage Rates Slide Back to 3-Year Lows

    Mortgage rates hit reverse once more as market jitters over the economic outlook and expectations of a FED rate cut delivered for prospective buyers.

  • Bloomberg

    Fannie-Freddie Investors Fighting Profit Sweep Get Key Win

    (Bloomberg) -- Fannie Mae and Freddie Mac investors won a big victory in their long battle to reap benefits from their stakes in the mortgage giants with a court ruling letting them pursue claims that the U.S. sweep of the companies’ earnings is illegal.A panel of federal appeals court judges in New Orleans overturned a ruling that backed the government’s right to take all of the mortgage giants’ profits. The judges also concluded that the structure of Fannie and Freddie’s regulator, the Federal Housing Finance Agency, is unconstitutional because of job protections for the agency’s director.“Congress created FHFA amid a dire financial calamity, but expedience does not license omnipotence,” a majority of judges on a 16-member panel said in Friday’s ruling.The ruling came a day after the Treasury Department unveiled its long-awaited plan to end more than a decade of federal control of Fannie and Freddie. The plan disappointed investors, in part because it lacked specifics on key details that would determine how to end the government’s conservatorship of the companies. Shares of the companies fell the most since January after the report’s release.Fannie and Freddie don’t make loans themselves. Instead, they keep the nation’s mortgage market humming by buying mortgages from lenders and packaging them into bonds that are sold to investors with guarantees of interest and principal.The companies were put into federal conservatorship in 2008 as the housing market cratered and were sustained by taxpayer aid. They have since returned to profitability and paid in $115 billion more in dividends to the Treasury than they received in bailout funds. Since 2013, nearly all of their profits have been sent to the Treasury under a policy called the “net-worth sweep.”The companies’ shareholders, including hedge-fund luminaries such as John Paulson and Bill Ackman, have griped for years about the terms of conservatorship. Investors have sued regulators multiple times seeking to end the sweep and gain access to the Fannie and Freddie’s profits. Those lawsuits have mostly been unsuccessful and this case, a full court review of a ruling of a three-judge panel, was seen as a last hope by many of the shareholders.“We are delighted that the court has made clear that the net worth sweep will not be allowed to stand,” the shareholders’ lawyer, David Thompson, said of Friday’s ruling.The U.S. Supreme Court last year declined to consider a case arising from a Washington appeals court decision that blocked another group of investors’ attempt to sue the FHFA over its authority to impose the sweep.A U.S. Treasury Department spokesman referred a request for comment to the Justice Department, which declined to comment. An FHFA spokeswoman didn’t immediately reply to a request for comment.The case is Collins v. Mnuchin, 17-20364, U.S. Court of Appeals for the Fifth Circuit (New Orleans).(Updates with comment by lawyer for investors in eighth paragraph.)To contact the reporter on this story: Austin Weinstein in New York at aweinstein18@bloomberg.netTo contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, Peter Blumberg, Joe SchneiderFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Why Fannie Mae and Freddie Mac Sank Today
    Motley Fool

    Why Fannie Mae and Freddie Mac Sank Today

    Investors were disappointed by the lack of details in the government's new housing-reform plan.

  • Bloomberg

    Fannie-Freddie Fall as Trump Plan Shows Quick Windfall Unlikely

    (Bloomberg) -- The Trump Administration’s plan to release Fannie Mae and Freddie Mac from their government shackles laid out a vision that could eventually lead to hedge funds minting riches on their investments in the mortgage giantsBut the Treasury Department’s proposal left much to be ironed out, signaling there might not be a windfall unless President Donald Trump wins re-election in 2020. That sentiment was palpable on Wall Street Friday with Fannie and Freddie suffering their biggest one-day drops since January.Read More: Trump Fannie-Freddie Plan Urges Ending Decade of U.S. RuleTreasury officials acknowledged that their recommendations could take years to implement -- a timetable that would extend beyond Trump’s first term. And the report, released Thursday, left it to a politically divided Congress to handle some of the most sweeping changes.In the months before a presidential election, legislative action typically slows to a crawl. If Trump loses, an administration led by Wall Street scourge Elizabeth Warren or even Joe Biden would be expected to scrap ideas that came from Treasury Secretary Steven Mnuchin.“Post-election, the odds get a lot more complicated,” said Jim Parrott, a former housing official during the Obama administration. “If you’re an investor, you’ve got to hope Trump wins and that Mnuchin, or someone like-minded, remains at Treasury. A Democratic administration will never support a plan that enriches a few hedge funds to the tune of billions of dollars.”The good news for Paulson & Co., Pershing Square Capital Management LP and other hedge funds that own Fannie and Freddie shares is that Treasury made it crystal clear that it wants the companies to build up their capital buffers and exit the government’s grip.That scenario sounds a lot like something known as recap and release that hedge funds have spent millions of dollars lobbying on in Washington. That’s because it would likely lead to stock sales that enrich existing investors.Yet Treasury’s outline calls for another, separate plan to hash out the details of how Fannie and Freddie would boost capital. Also, Treasury indicated it wants to let lawmakers take a crack at figuring out a fix before it and the companies’ regulator, the Federal Housing Finance Agency, do anything bold. Taken together, the statements suggest the process will be slow-moving.“The report raises as many questions as it answers,” said Jaret Seiberg, an analyst at Cowen & Co. LLC. “The next six months will be key as FHFA and Treasury negotiate.”Fannie fell 13% to $2.60 in New York trading as of 12:49 p.m., the biggest decline since January. Freddie slumped 11% to $2.49.The two companies don’t make loans. Instead, they purchase mortgages from banks and other lenders and package them into securities. Those securities have guarantees that protect investors from the risk of homeowners defaulting. The process is central to the mortgage market.Fannie and Freddie got into trouble when the housing market cratered in 2008, with the companies being taken over and eventually receiving $191 billion in taxpayer funds to keep them afloat. They have since become profitable again, paying out more than $300 billion in dividends to the Treasury.The Trump administration wants the conservatorships to end because it believes the companies’ insufficient capital and market dominance mean taxpayers are at risk as long as the government has such a big footprint in the housing sector.There is plenty for shareholders to like about the Treasury report.Fannie and Freddie are currently limited to holding $3 billion in capital apiece to protect the companies from another housing crash.The plan calls for increasing those buffers, which could be seen as a step toward ending what’s known as the net worth sweep -- a controversial policy implemented during the Obama administration that forces Fannie and Freddie to send nearly all their earnings to the Treasury. Hedge funds, in lawsuits that have been unsuccessful thus far, have sought to end the profit sweep because they want to see at least some of those dividend payments redirected to themselves.In a bad sign for shareholders, the Treasury report ponders at least one method for bolstering Fannie and Freddie’s capital that hedge funds probably won’t like: putting the companies in receivership. Such a tactic, which is a form of bankruptcy, could wipe out existing shareholders, depending how it’s done.The report is already dividing politicians on Capitol Hill, not a promising sign for quick legislation.Senator Elizabeth Warren, the Massachusetts Democrat who’s seeking the party’s presidential nomination, called the plan a “shameful” ploy to make home-buying harder, especially for families of color. Both Senator Sherrod Brown and House Financial Services Committee Chairwoman Maxine Waters, key Democrats that the administration will need to get on board if they want to pass housing-finance legislation, also sharply criticized the plan.Senate Banking Committee Chairman Mike Crapo, an Idaho Republican, said he prefers that Congress fix Fannie and Freddie, though he added that the Trump administration should start moving forward on “administrative reforms.”The politics surrounding housing finance will be on display Sept. 10 when Mnuchin, FHFA Director Mark Calabria and Housing and Urban Development Director Ben Carson testify before the banking panel.Whatever happens, the silver lining for hedge funds is that they’ve already benefited from the Trump administration’s push on Fannie and Freddie. This year alone, the companies’ share prices have more than doubled on expectations that the conservatorships will eventually end.That has been especially good for Paulson & Co.’s John Paulson, who has a long history with Mnuchin. In 2008, they joined forces to buy troubled mortgage lender OneWest, a deal that proved lucrative for both of them.(Updates with lawmakers’ criticism in the 19th paragraph.)To contact the reporters on this story: Elizabeth Dexheimer in Washington at edexheimer@bloomberg.net;Austin Weinstein in New York at aweinstein18@bloomberg.netTo contact the editors responsible for this story: Jesse Westbrook at jwestbrook1@bloomberg.net, Gregory MottFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bloomberg

    Wall Street Casts Skeptical Eye on Trump Fannie-Freddie Plan

    (Bloomberg) -- Shares of Fannie Mae and Freddie Mac fell Friday morning after the Trump administration laid out its vision for releasing the mortgage giants from more than a decade of federal control.Analysts said the report represented progress, but cautioned that it offered scant details, warned that any change will likely take a long time, and probably depends on bipartisan efforts in Congress and President Trump winning re-election.House Financial Services Chair Maxine Waters was an early critic, saying on Thursday that the proposal would hinder homeownership and could cause “significant damage for low-income persons and communities of color.” Investors will watch a Sept. 10 Senate Banking Committee hearing on the future of housing finance, where Treasury Secretary Steven Mnuchin and Federal Housing Finance Agency, or FHFA, director Mark Calabria are are scheduled to testify.Fannie and Freddie common shares both sank as much as 15% in early trading, the most intraday since June 10. Fannie shares have rallied 145% so far this year, while Freddie’s have gained 136%, largely due to shareholder optimism change is coming.Here’s a sample of analyst commentary:Compass Point, Isaac Boltansky“The plan is directionally positive for shareholders and the broader effort to end the conservatorship,” Boltansky said via email. “The report may be light on details compared to the expectations of some market participants, but we shouldn’t miss the forest for the trees.”The Trump administration, he said, “appears committed to action, so this story is still about timing, execution, and political will.”FTN, Jim Vogel“The plan weds the federal government to Fannie, Freddie, and single-family housing finance to roughly the same degree they’ve been locked together for the last four decades,” Vogel wrote in a note. “Although it claims not to be, the report contemplates as much intrusion as the previous system (1970s to 2008) and the existing one. That may not doom the plan, but it does introduce doubt about its adoption or its success.”Odeon, Dick BoveThe proposal certifies the “continued existence of Fannie Mae and Freddie Mac,” arguing they “should be recapitalized and released from their conservatorship,” Bove wrote. “Recap and release” refers to the process of bolstering Fannie and Freddie’s ability to absorb losses and then returning them to private shareholder ownership.Bove flagged “multiple winners,” including investors in preferred issues, who “are about to make a great deal of money.” Other winners: Wall Street, which “may be about to raise the largest amount of money in its history for what would now be private companies,” and the banking industry, which may get the “right to set up secondary mortgage companies that would compete with the traditional” government-sponsored enterprises, if Congress agrees.“Everyone could make money here including the taxpayers, the United States economy, the housing industry, holders of GSE preferred issues, and possibly even the investors in the GSE common shares,” Bove said. At the same time, he cautioned, “the road to making this happen will not be without numerous road blocks.”Bloomberg Intelligence, Ben ElliottThe Treasury Department’s Sept. 5 report isn’t another “plan to have a plan.” It’s a final negotiating overture to a Republican Senate that won’t succeed in passing legislative reform. The plan’s clear, actionable intent is to end the conservatorships. We look to Sept. 10 to gauge the Federal Housing Finance Agency’s cooperation.Cowen, Jaret Seiberg“The White House plan for the future of Fannie and Freddie defers often to Congress to act,” due to “political and good government reasons,” Seiberg wrote.“Despite the request for legislation, we believe Team Trump has kept the door open to administrative action. And we see Team Trump as prepared to push recap and release.”AGF Investments, Greg Valliere“Hats off to the Treasury Department for at least beginning the process of reforming Fannie Mae and Freddie Mac,” Valliere wrote in a note.“But the plan released yesterday was short on details and [is] certain to encounter opposition in the House, where Democrats want to focus on affordable housing, not freeing the agencies from government control.”Valliere added that much depends on Congress, but “there’s a possibility of regulatory reform” by the FHFA. That agency is “filled with Trump loyalists,” and may “end the conservatorship that Freddie and Fannie were forced to enter after the financial crisis a decade ago.”Even so, Valliere doubted any FHFA reforms would “pay imminent dividends to hedge funds and other investors who have been betting recently that there could be a resolution — finally — of who gets the agencies’ profits. Anything that might look like a shareholder give-away would ignite a firestorm in Congress and could become a political liability for Republicans who already are worried that housing is an issue that could work against them in the upcoming election.”KBW, Brian Gardner“In our view, the reports contained little new information,” Gardner wrote. “While Treasury recommended ending the conservatorship and the net profit sweep, there is no clear timelines for doing so and we can envision a scenario where the sweep and the conservatorships last into 2020 and possibly beyond.”Capital Alpha, Charles Gabriel“We now urge caution in assuming how quickly and clearly a ‘recap and release’ plan might proceed, particularly with GSE critics and Hill supporters of the banks demanding tricky reforms that could upset any balance or produce negative optics along the way,” Gabriel wrote.He saw “both positives and negatives for stakeholders and policymakers, with Treasury Secretary Mnuchin arguably creating a ‘roadmap,’ more than a ‘blueprint,’ with many possible detours designed as political gestures or accommodations along the way.”For investors in common and preferreds, “the outlook seems confirmingly positive, albeit with uncertainty for timetable and crucial tumblers’ falling into place.”Beacon Policy AdvisorsThe blueprint is “long on words, short on new details,” Beacon wrote in a note.“Although the menu of potential administrative changes to the GSEs is now on the table, there is even less clarity over the next steps,” they said, citing three “important investor milestones”: Ammeding the PSPA (senior preferred stock purchase agreements) to stop the net worth sweep and allow Fannie and Freddie to retain earnings as capital; announcing how the Treasury plans to treat its current investments, and how FHFA and Treasury intend to increase GSE capital beyond allowing retained earnings.“Despite the overall positive message that the release of this plan has generated, its long delay and lack of specificity on key contentious points further bolsters our view that the risk of protracted negotiations is extremely high,” Beacon said.The firm added that the “closer it comes to the November election, the harder it will be for any outside capital to be raised due to fear of President Trump losing the election and his opponent halting or even reversing these reform plans.”(Adds Bloomberg Intelligence commentary.)To contact the reporter on this story: Felice Maranz in New York at fmaranz@bloomberg.netTo contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Will DaleyFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Fannie Mae and Freddie Mac Won't Go to Market Until End of 2020, FHFA Director Says
    Bloomberg

    Fannie Mae and Freddie Mac Won't Go to Market Until End of 2020, FHFA Director Says

    Sep.16 -- Federal Housing Finance Agency Director Mark Calabria discusses the outlook for Fannie Mae and Freddie Mac with Bloomberg's Vonnie Quinn on "Bloomberg Markets."