GSE Reform
The Valuable Franchises of Fannie Mae and Freddie Mac
"I like the [GSE] preferred [stock] because the market does perceive both Fannie and Freddie to be near death, and that makes no sense to me," said Bruce Berkowitz. "You can buy the preferred at such discounts that you get unbelievable promised yields. I expect those preferreds to pay the dividends. …I don’t understand the 2012 [sweep] Amendment... The 2012 amendment is based as if we were still in 2008. …The lawsuit is about protecting our property. …The common sense of it makes no sense to me that you can just snap your fingers and take everything. “
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Posted: September 6th, 2013 | Permalink
Changes at FHA May Put Fannie and Freddie Back in Play
"The cost of doing business with [FHA] could skyrocket if the agency adopts a new method for calculating lenders’ liability for poorly underwritten loans that default," wrote Kate Berry in the American Banker. "If this goes through, it means it will be a lot more expensive to be an FHA lender," said K&L Gates' Phillip Schulman. "If a lender runs the risk that every time he makes a mistake it will be multiplied against his entire portfolio, he has to be very cautious." If FHA shrinks due to high insurance fees and lenders' fears of litigation risk, Fannie and Freddie are "back in play."
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Posted: August 14th, 2013 | Permalink
Will GSEs' Profits Waylay Reform Efforts?
“…[I]mproving profits at both Fannie Mae and Freddie Mac will likely slow down the impetus for the
GSE change that President Obama claims to support,” wrote Professor Anthony Sanders. “Thanks to the vigilance of FHFA Director Ed DeMarco, Fannie Mae and Freddie Mac are now profitable... [Rep.] Mel Watt (D-NC) may be replacing DeMarco as FHFA Director. Since Watt is Obama’s choice, would Obama really want to shut down Fannie and Freddie? Especially when Watt could order Fannie and Freddie to open the credit floodgates and principal writedowns?”
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Posted: August 8th, 2013 | Permalink
“Owning a Home is at the Very Heart of Middle-Class Security”
“It's time to help hard-working folks fulfill their dream of buying their first home,” wrote David Simas, Deputy Senior Advisor at the White House. “We can help responsible homeowners refinance their mortgage, and make sure middle-class families and all of those working to get into the middle class are never again on the hook to bailout certain mortgage lenders for irresponsibility and bad loans. ...We put together a that helps explain the President's plan for a more secure foundation for middle-class homeownership."
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Posted: August 6th, 2013 | Permalink
A Bipartisan Path for the Mortgage Market
"I think our bill from the Senate standpoint strikes an appropriate balance," said Senator Bob Corker (R-TN). "...[The] Hensarling bill is ideologically pure exercise, which will never have a single Democrat ever support it," said Senator Mark Warner (D-VA). "...Clearly, it would upend our existing housing finance system [and] ...destroy the 30-year mortgage."
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Posted: July 18th, 2013 | Permalink
Is It Time to End Fannie Mae and Freddie Mac?
"The simple fact is that [Fannie and Freddie] are now profitable," said Nela Richardson, Bloomberg analyst and former senior economist for Freddie Mac. "Not only that—they are the lynchpin of the American housing finance system." Until the private market demonstrates a "resurgence" of interest in mortgage paper, "it's hard to image a mortgage market without Freddie and Fannie," she added. Richardson also argued that "reform is happening" at the GSEs, even if Congress fails to reach a grand bargain on GSE reform.
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Posted: June 27th, 2013 | Permalink
