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Fannie Mae and Freddie Mac To Delist Shares From NYSE

June 16, 2010 By Chuck 4 Comments

Fannie Mae (FNM) and Freddie Mac (FRE) to delist the common stock from the NYSE

Under a directive from the Federal Housing Finance Agency (FHFA) both Fannie Mae and Freddie Mac are notifying the New York Stock Exchange of their intent to delist the common stock and multiple classes of its preferred stock.

Shares of the two firms will trade on the OTC Bulletin Board (OTCBB) on or about July 8, 2010.

Fannie Mae and Freddie Mac Move to Otcbb

Filed Under: Market Updates Tagged With: ,

Fannie Mae Needs More Taxpayer Money and States they are a Going Concern

May 11, 2010 By Chuck

Fannie Mae Reports Q1 -$2.29 v -$1.75e – quarterly filing

- Requesting an additional $8.4B from US Treasury, and possibly more in the future

Q1 metrics:
- Fair value losses $1.7B v loss $1.5B y/y
- Serious delinquency rate 5.47% v 3.15% y/y, v 5.38% q/q
- carrying value of foreclosed properties: $11.4B v $6.2B y/y, v $8.5B q/q
- Net worth deficit $8.4B v deficit $15.3B q/q
- Total home retention loan workouts: 105K v 50K q/q

From their recently filed 10-Q:

Impact of U.S. Government Support

We are dependent upon the continued support of Treasury to eliminate our net worth deficit, which avoids our being placed into receivership. Based on consideration of all the relevant conditions and events affecting our operations, including our dependence on the U.S. Government, we continue to operate as a going concern and in accordance with our delegation of authority from FHFA.

Pursuant to the amended senior preferred stock purchase agreement, Treasury has committed to provide us with funding as needed to help us maintain a positive net worth thereby avoiding the mandatory receivership trigger described above. We have received a total of $75.2 billion to date under Treasury’s funding commitment and the Acting Director of FHFA has submitted a request for an additional $8.4 billion from Treasury to eliminate our net worth deficit as of March 31, 2010. The aggregate liquidation preference of the senior preferred stock was $76.2 billion as of March 31, 2010 and will increase to $84.6 billion as a result of FHFA’s request on our behalf for funds to eliminate our net worth deficit as of March 31, 2010. […]

Fannie Mae and Freddie Mac are still not being included on the government’s balance sheet. This is not an oversight, it is intentionally being left off the balance sheet for if it were to be included the federal deficit would increase dramatically. How long can the Obama administration continue to treat Fannie and Freddie as illegitimate children?

The taxpayers are essentially making regular payments into these black holes. It is about time they be reflected on the balance sheet of the U.S. Government.

Filed Under: Debt, Mortgages, Real Estate Tagged With: , ,

Freddie Mac Needs More Money – From You

May 5, 2010 By Chuck

Freddie Mac (FRE) moments ago announced that they need $10.6 Billion to address a budget deficit of $10.5 Billion.

The FHFA, as conservator, will formally submit a draw request from the U.S. Treasury (taxpayers) as soon as possible. It is expected that Freddie Mac will receive the new funds by June 30, 2010.

Filed Under: Market Updates Tagged With: ,

Geithner Pulls a Fast One On Christmas Eve – Tells Fannie & Freddie That Government Will Backstop ALL Losses

December 24, 2009 By Chuck

Breaking -

What is the best way to announce news that people may not be too thrilled with? You do it on Christmas Eve, when Wall Street is entering ‘sleep mode’ for the Christmas break, and when it is also a time when many Americans are too busy with holiday preparations to be watching the financial press.

This afternoon, Treasury Secretary Tim Geithner (TurboTax Timmy) announced that the Government (tax payers) will essentially backstop any and all losses above the already pledged funds that Fannie Mae and Freddie Mac incur out to December 31, 2012.

SECOND AMENDMENT dated as of December 24,2009, to the AMENDED AND
RESTATED SENIOR PREFERRED STOCK PURCHASE AGREEMENT dated as of
September 26,2008, between the UNITED STATES DEPARTMENT OF THE TREASURY
(“Purchaser”), and FEDERAL HOME LOAN MORTGAGE CORPORATION (“Seller”), acting
through the Federal Housing Finance Agency (the “Agency”) as its duly appointed conservator
(the Agency in such capacity, “Conservator”). [...]

Amendment to Section 1 (Relating to Definition of “Maximum Amount”).

The definition of “Maximum Amount” in Section 1 of the Existing Agreement is hereby
amended to read as follows:

“Maximum Amount” means, as of any date of determination, the greater of
(a) $200,000,000,000 (two hundred billion dollars), or (b) $200,000,000,000 plus
the cumulative total of Deficiency Amounts determined for calendar quarters in
calendar years 2010,2011, and 2012, less any Surplus Amount determined as of
December 31,2012, and in the case of either (a) or (b), less the aggregate amount
of funding under the Commitment prior to such date. [...]

That’s right, a blank check has now been handed to Freddie and Fannie, and the routing number on the bottom of the check reads  :TAX PAYER:

Perhaps this decision was necessary due to the still rising delinquencies that I reported on earlier today. Delinquencies across all income classes are still rising, and this trend is expected to continue. So as more and more homes are foreclosed and banks must then acknowledge the actual value (mark to market) which will result in significant losses from the make believe value they currently sit at on the books (thanks to mark to make believe accounting rule changes last year).

It could also be that the housing market has not yet reached bottom. A scenario that I still see as very real. Some have said the worst has passed with regards to the housing market, I say there is still more pain ahead for this sector, much more.

Everyone should feel like Santa Clause on this Christmas Eve because we just gave Fannie and Freddie a free ride, and we will pay for it all.

Filed Under: Market Updates Tagged With: , , ,

Fannie Mae & Freddie Mac – The Nations Embarrassment

December 24, 2009 By Chuck

Fannie Mae (FNM) and Freddie Mac (FRE) are among this nations most embarrassing organizations, and together they stand to loot the tax payers dry in mounting losses.

Let us begin with the latest news concerning mortgage delinquencies:

December 23 – Freddie (Mac) said November delinquencies on single-family residences rose to 3.72% from 3.54% in October and 1.52% a year earlier.

Freddie Mac delinquencies e1261641183286 Fannie Mae & Freddie Mac The Nations Embarrassment

Freddie Mac Delinquencies

And on a much broader measure we have this:

December 22 -WASHINGTON — The U.S. housing market continued to deteriorate in the third quarter as even the most credit-worthy borrowers increasingly fell behind on their mortgages, highlighting the problems policy makers have faced in trying to address the problem.

A new report from the Office of Thrift Supervision and Office of the Comptroller of the Currency found that the percentage of current and performing mortgages dropped for the sixth consecutive quarter, as foreclosures in process topped 1 million mortgages at the end of September. The report covers roughly 34 million loans totaling $6 trillion in principal balances, or approximately 65% of the U.S. mortgage market.

The regulators said that serious delinquencies, loans that are at least 60 days past due, increased across all loan categories and climbed to 6.2% of the loans in the portfolio during the third quarter. The report said that just 67.7% of option adjustable-rate mortgages were considered current at the end of the third quarter, while 27.9% were either seriously delinquent or in the process of foreclosure.

The most troubling finding was that even borrowers considered “prime,” or the least risky, increasingly can’t pay their loans. The report said that 3.6% of prime mortgages were more than two months behind on payments, more than double from a year ago. (emphasis added)

To date, both Fannie Mae (FNM) and Freddie Mac (FRE) were put into conservatorship last year due to enormous losses, have been bailed out by the tax payer to the tune of $100 Billion dollars, and now with losses continuing to escalate the Obama administration is set to announce another infusion of tax payer funds into these black holes. It is being rumored that President Obama will make the announcement of “providing additional support to these critically important institutions” with the next week or two. And the amount of additional support bailouts is anticipated to be somewhere between $200 to $400 Billion.

What ever happened to ‘no more bailouts’ ?

And finally, because Fannie and Freddie are so critically important to restoring health to the housing and mortgage industries the CEO’s will enjoy a nice holiday pay package between $4 and $6 Million. An official announcement is expected on Christmas Eve.

And just how well of a job is the Obama administration doing at saving homeowners?

12 24 2009 2 42 12 AM e1261641508669 Fannie Mae & Freddie Mac The Nations Embarrassment

This reminds me of Hurricane Katrina :

“You’re doing a heck of a job Brownie”

Filed Under: Market Updates Tagged With: , , , , ,

S&P 500 Chart and GDP

November 24, 2009 By Chuck

This morning the Q3 GDP was revised lower to 2.8% (from 3.5%) and personal consumption was also revised lower to 2.9% (from 3.2%).

The mortgage industry is still falling apart from within. Consider this news out of Freddie Mac (FRE) this morning:

Freddie Mac Reports Oct monthly metrics; Single Family delinquency rate 3.54% v 3.33% m/m

Until there is a significant improvement in delinquencies this data still suggests much steeper losses lay ahead of us in the financial sector.

S&P Case Shiller Price Index came in ‘not so hot’:

SEPT S&P/CASESHILLER-20 Y/Y: -9.36% V -9.10%E;   HOME PRICE INDEX: 146.5 V 146.9E

It had been showing the slightest sign of stabilization in recent reports, now it is headed back down again.

During the overnight hours we got confirmation of the channel on the S&P E-mini’s with the /ES trading down to 1098, right at the channel support line.

Watch this channel carefully, a move below the channel is the dynamic change needed to set this market into a new downward path. The range of the channel is 1100 on the bottom and 1120 on the high side.

S&P Futures

S&P Futures

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Read more on S&P 500 (SPX), Freddie Mac, S&P/Case-Shiller Home Price Index - Composite 10 (CSXR) at Wikinvest
Filed Under: Market Updates Tagged With: , , ,

Freddie Mac (FRE) Needs Another $30 Billion

March 11, 2009 By Chuck

Freddie Mac (FRE) reported a quarterly loss of $23.9 Billion and has said it will need another $30.8 billion cash injection from the U.S. Government and says that even with the Government injection of more funds it may not be able to remain solvent.

Freddie Mac Reports Q4 -$7.37 v -$3.97 y/y, Sales negative $15.8B v negative $9.56B q/q
- Q4 loss $23.9B v loss $2.5B y/y
- Q4 shareholders deficit $30.7B

- Expects 2009 credit losses to remain high.

- Says the Treasury’s funding may not be enough to keep company solvent.

- Says the SEC is conducting interviews of its employees and the company has received subpoenas as part of a formal probe.
Filed Under: Market Updates Tagged With:

Housing Rescue Plan – Tim Geithner Statement

February 18, 2009 By Chuck

The following is the official press release by the White House / Treasury Department announcing how they will add more funding to Fannie and Freddie to support the housing rescue plan.

—–

Washington, DC — Today, the Treasury Department is increasing its funding commitment to Fannie Mae and Freddie Mac to ensure the strength and security of the mortgage market, to help maintain mortgage affordability, and to help keep interest rates low.

Fannie Mae and Freddie Mac are critical to the functioning of the housing finance system in this country and play a key role in making mortgage rates affordable and maintaining the stability and liquidity of our mortgage market. In 2008, almost three-quarters of new home loans were financed or guaranteed by Fannie Mae and Freddie Mac.

Using funds already authorized by Congress for this purpose, Treasury is amending the Preferred Stock Purchase Agreements, contractual agreements between the Treasury and the conserved entities designed to ensure that each company maintains a positive net worth, to $200 billion each from their original level of $100 billion each. The increased funding will provide forward-looking confidence in the mortgage market and enable Fannie Mae and Freddie Mac to carry out ambitious efforts to ensure mortgage affordability for responsible homeowners.

[Read more...]

Filed Under: Market Updates Tagged With: , ,
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