Monday, May 05, 2008

Reasuring Phony Mae & Fraudie Mac Facts.......

Schould be an interesting call today........ Got gold? UPDATE: Stock under pressure premarket......... No wonder when you read through the Q1 Investor Summary Fannie Mae ( especially the delinquency rates starting page 22 ). Now up over 5 percent!

Sind das nicht beruhigfende Daten und Fakten zu den wohl wichtigsten Finanzinstituten weltweit...... Wird sicher eine interessante Telefonkonferenz........Got Gold? UPDATE: Aktie vorbörslich stark unter Druck. ......Sollte bei Durchsicht der folgenden Präsentation Q1 Investor Summary Fannie Mae nicht weiter verwundern. Lege Euch besonders die Charts zu den notleidenden Krediten ab Seite 22 ans Herz. Inzwischen über 5% im Plus!

Doubts Raised on Big Backers of Mortgages NYT
Fannie Mae and Freddie Mac now overwhelmingly dominate it, handling more than 80 percent of all mortgages bought by investors in the first quarter of this year. That is more than double their market share in 2006.

But some financial experts worry that the companies are dangerously close to the edge, especially if home prices go through another steep decline. Their combined cushion of $83 billion — the capital that their regulator requires them to hold — underpins a colossal $5 trillion in debt and other financial commitments.

The companies, which were created by Congress but are owned by investors, suffered more than $9 billion in mortgage-related losses last year, and analysts expect those losses to grow this year. Fannie Mae is to release its latest financial results on Tuesday and Freddie Mac is to report earnings next week.

bigger/größer

The companies are sitting on as much as $19 billion in additional losses that they have not yet fully acknowledged, analysts say. If either company stumbled, the mortgage business could lose its only lubricant, potentially causing the housing market to plummet and the credit markets to freeze up completely.

By the end of last year, the companies had guaranteed or invested in $717 billion of subprime and Alt-A loans, up from almost none in 2000.

Last year, in return for buying billions of dollars of subprime mortgages to help stabilize the market, executives won the right to expand their investment portfolios. In March, the companies agreed to raise more capital within the year. In exchange, they received an additional $200 billion in purchasing power.

UPDATE:

I think you can add another $ 200 bilion..... Party on.....

Nach diesen Meldungen dürfte wohl noch mal eine ähnliche Summe hinzukommen.... Die Party geht weiter.....

Marketwatch Fannie Mae's federal regulator said on Tuesday it will reduce the company's capital-surplus requirement to 15% from 20% when Fannie Mae completes a new capital-raising plan. Fannie said Tuesday it is planning to raise $6 billion in new capital. The mortgage-finance giant reported a first-quarter loss of $2.2 billion on Monday, or $2.57 a share, citing credit-related expenses

> On top of this Fannie is hinting that another 5 percentage point reduction to 10 will be in place in September 2008 ( see end of page 1 Press Release!)

> Darüberhinaus wird angedeuted das eine weitere Reduzierung um 5 Punkte auf dann 10% wohl Ende September kommen wird ( siehe Ende Seite 1 Press Release )

“We’ve taken tremendous risks by loosening these companies’ purse strings,” said Senator Mel Martinez, Republican of Florida and a former secretary of housing and urban development. “They could cause an economywide meltdown if they got into real trouble and leave the public on the hook for billions.”

> When watching this tiny spread it should be clear that the market is already assuming that there will the biggest bailout ever....

> Beim Betrachten dieser lächerlichen Risikoaufschlägen sollte jedem klar sein das hier der gigantischte Bailout der Geschichte bereits als gegeben hingenommen wird. Leider wohl mal wieder zurecht.....

Last month, the companies promised to pump money into the more expensive reaches of the housing market. In return, Congress temporarily raised the cap on the size of the mortgages they can buy to almost $730,000 from $417,000

> Here is more on Phony & Freddie from Contrary Investor

Again, please remember that the important numbers to focus upon are the twelve month moving average amounts. These are the numbers that are really showing us trend and potentially important trend change from a historical perspective. In fact, although it's just our opinion, we believe what you'll see below is not being given enough attention in financial market circles these days. First up is foreign purchases of US government agency securities. In the past, what has attracted foreign interest, at least we believe so, has been the yield spread differential between government agency paper and Treasuries. You can clearly see that since the summer of last year, foreign community purchasing of US government agency paper has cooled down meaningfully. The last time we saw this type of a drop off was when it became known that Freddie, and then Fannie a short while later, were no longer able to file audited financial statements

Remember, these are numbers through February. What had not yet transpired when these numbers were reported was the revelation of increased lending limits for Fannie and Freddie in conventional mortgage lending from $417K to $729K. Moreover, the OFHEO had also not yet allowed lowered capital requirements for these two mortgage paper behemoths, further allowing them to mushroom their balance sheets relative to total capital should they choose to do so in the future (which they will choose to do so - count on it). The question becomes, what will foreign community reaction to these two news items be come the March and April numbers for foreign purchases of US agency paper? Implicit with the hike in nominal dollar lending limits and the allowance of balance sheet growth on what will be a defacto smaller capital base is increased financial risk. You already know we'll be sure to let you know foreign reaction vis-à-vis forward purchasing of agency paper. The bottom line being? The answer will be a matter of confidence. And it sure as heck appears clear that confidence in US financial paper has already become a very meaningful issue for the foreign community really since last summer.

As you'll see below, to suggest that the foreign community has been an important support to cost of capital at the government agency level, and ultimately the cost of mortgage debt in the US over time, is a wild understatement.

> The US should be very fortunate that they have found enough "dump" money to accumulate these kind of secirities..... CHAPEAU ( no kidding )!

> Die US können sich in der Tat wirklich glücklich schätzen das es Ihnen gelungen ist soviel ausländischen Kapital in solch Papiere zu lotsen. Ziehe aufrichtig meinen Hut vor solch guter PR!

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