Fannie and Freddy

[billyjoe]

FNM has been unusually stable as of late. I tried to get more at .70 yesterday and it hit that number for awhile but my order didn't fill. If it gets to 1 or close I may get out and back in at .75 or there abouts.

--------------billy

[billyjoe]

Headlines "Bailout Plan Nears Agreement". Let's see if there's a spike up for FNM and FRE Monday. Get your sell orders ready to take advantage if it happens. Last after hours quotes are FRE-2.09 FNM-1.93.

---------------billy

[Peter Hansen]

Interesting Article on Whom to Blame for whole mess!

New York Times


September 30, 1999
Fannie Mae Eases Credit To Aid Mortgage Lending


By STEVEN A. HOLMES
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

[billyjoe]

How does a bailout help Fannie and Freddie...they are already toast, no?

I don't know why people react the way they do but I'll bet FNM will go up if an agreement is reached if just for a short time.

---------------billy

[mrmarket]

asfd9,
If they announce a settlement you might make 40% or so real quick. Are you ready to get out fast with a profit? I sold some yesterday and it dropped from 2.45 to 1.09 in about 45 minutes. Then back up over 2.00. You've got to keep your eye on it. Good luck.

---------------billy

How does a bailout help Fannie and Freddie...they are already toast, no?

[billyjoe]

asfd9,
If they announce a settlement you might make 40% or so real quick. Are you ready to get out fast with a profit? I sold some yesterday and it dropped from 2.45 to 1.09 in about 45 minutes. Then back up over 2.00. You've got to keep your eye on it. Good luck.

---------------billy

[asfd9]

I got in at $2.04. They can't just let all the stock in these two go completely belly up. I just put in a couple hundred but there are still those with thousands in these dogs. Stock got to worth at least something.

[mrmarket]

I caught rumor of some positive volume going into Freddy on Aug 22nd. I bought and rode it from 3.05 to 5.15 then cash out and ran like mad. Feels good to hit a small window and have the sense to get out. Trades today under $1

I will be forever known as one of the last Fannie shareholders....

[New-born baby]

How the heck do they still have the nerve to pay a divvy???

I'm not sure. But then again, how did they have the nerve to loan out all that dough to people they knew would not repay?

I really think the problem is not nerve, but brains. I am not sure how much nerve they have, but I am quite sure they have no brains.

[IIC]

How the heck do they still have the nerve to pay a divvy???

[New-born baby]

Time to dip into some more Fannie? or is it a falling knife????

Another Beare-Stearns type situtation. Their shareholders got killed in that deal.


C looks like it will be ripe to buy at . . . . $11.


Or lower.

[IIC]

Time to dip into some more Fannie? or is it a falling knife????

Stock holders are at that bottom of the barrel when these outfits are nationalized

[mrmarket]

Time to dip into some more Fannie? or is it a falling knife????

[billyjoe]

CEO of FRE says we're only through 1/2 of the devaluation of the housing market and this mess will continue "well into 2009" and he's being optimistic!

---------------billy

[hags]

NB BUY SKF: Ultra SHORTS Financials MACD, RELATIVE STRENGTH AND DMI ALL SUPER!

http://bigcharts.marketwatch.com/pri...6sid%3D2598680

I expect a pullback on SKF....I'd wait a day or so....no shorting and good news from Wells Fargo means SKF will pullback....financials will have a small bounce here...IMO of course...

hags