Freddie (FRE) & Fannie (FNM) 01 (May 08 - Feb 12)

[blid2def]

Erm... FNM practise mathematical aerobics, and everybody else follow? I mean... this sounds like a stupid reason for things to be moving in that industry. Either there's a better reason, or brokers have been working the phones and suckering people into buying into this bounce.

If anything... if FNM does a 2-for-1 reverse split (i.e. reduce float by 50%), then the shares only need to be trading at $0.50 now in order to be $1 post-consolidation.

Am I stupid? What am I missing?

[kennynah]

eh....just as in stock splits...where the stock value usually drops to 1/2 the amount .... a reverse stock split will 2x the amount to the perceived value... it cant be 50cents bcos after the process of reverse stock split...it will then still stay at 50cents..so, it is now that it will have to go up to $1 (per requirements to be stay listed)

[iam802]

Sun (JAVA) has done this some time back.

Push the price from $5 to $15.

And now it is at $3+

[blid2def]

eh....just as in stock splits...where the stock value usually drops to 1/2 the amount .... a reverse stock split will 2x the amount to the perceived value... it cant be 50cents bcos after the process of reverse stock split...it will then still stay at 50cents..so, it is now that it will have to go up to $1 (per requirements to be stay listed)

No leh. Let's use this example

Pre-reverse split
Total float = 1000 shares; Price = $1
Market cap = 1000 shares x $1 = $1000

Post-reverse split (say 2-to-1 consolidation)
Total float = 1000 / 2 = 500 shares; Price = ?
Market cap = unchanged = $1000 = 500 shares x $?
So, post-reverse split price = $2

Hence, if FNM just needs to be $1 in future, then assuming a 2-to-1 consolidation, it only needs to trade at $.50 now to meet the minimum requirement. Then again, that would be risky because drop 1 cent, have to do again. Hahaha... so I guess, post-consolidation, they'll build some margin into it so they have room to fall.

[kennynah]

money not enough....

Freddie Mac seeks $30 bln-$35 bln in more funds from the Treasury - Update
1/23/2009 10:38 PM ET

(RTTNews) - In a regulatory filing made Friday evening, Freddie Mac (FRE: News ), the government-sponsored mortgage investment company, revealed that it would seek to draw an additional amount of approximately $30 billion to $35 billion under the $100 billion Senior Preferred Stock Purchase Agreement with the Treasury.

Freddie Mac, which drew $13.8 billion from the Treasury in November 2008, specified that this estimated additional draw reflects its current estimate of the impact of operating losses and other items that have a direct impact on its net worth in the fourth quarter.

It is to be noted that, as per the terms of the Senior Preferred Stock Purchase Agreement, upon the request of the Freddie Mac, the Treasury needs to provide funds after any quarter in which company reports a negative net worth. The company received $13.8 billion following its release of results for the third quarter of 2008.

However, Freddie Mac stated that the actual amount of the draw might differ materially from this estimate as it goes through its internal and external process for preparing and finalizing its financial statements. The company said it is in the process of preparing its financial statements for the fourth quarter of 2008 and the year ended December 31, 2008.
The McLean, Virginia-based company also announced that it has entered into a settlement agreement with JPMorgan Chase & Co. (JPM: News ) with regard to mortgages previously serviced by Washington Mutual Bank. As per the terms of the settlement, JPMorgan Chase will assume Washington Mutual's recourse obligations to repurchase any of such mortgages that were sold to Freddie Mac with recourse.

Freddie Mac said it would also receive a one-time payment from JPMorgan Chase with respect to obligations of Washington Mutual to buyback any of such mortgages that are inconsistent with certain representations and warranties made at the time of sale. Freddie Mac did not disclose how much it would receive from JPMorgan.

[iam802]

------
Freddie Mac CEO to resign

http://money.cnn.com/2009/03/02/news/ne ... iemac_ceo/

By Aaron Smith, CNNMoney.com staff writer
March 2, 2009: 9:45 AM ET


NEW YORK (CNNMoney.com) -- Freddie Mac's chief executive, installed last year after the government took over the troubled mortgage finance company, is resigning, the company and its regulator said Monday.

David Moffett will step down by March 13. Freddie Mac (FRE, Fortune 500) said it would announce a successor by then.

Moffett said that he planned to return to the financial services sector. He served as chief financial officer of U.S. Bancorp from 1993 until 2007.

"We are very sorry to see David go," Freddie Chairman John Koskinen said in a statement. "He made valuable contributions to Freddie Mac as the company transitioned into conservatorship."

Moffett replaced Richard Syron as Freddie CEO in September, when Freddie and Fannie Mae (FNM, Fortune 500) were placed under conservatorship by its regulator, the Federal Housing Finance Agency.

Both companies back mortgages held by private homeowners, and have received massive cash infusions from the government.

Freddie Mac, which has accessed nearly $14 billion in government funds, said it may need up to $35 billion more when it reports its financial results in coming weeks.

According to Freddie Mac, Moffett was hired "to provide leadership for the company during one of the toughest housing markets in decades" and to work with the FHFA in bringing stability to the housing market.

[iam802]

US$200B is not enough. Fred needs more......

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Freddie to Tap $30.8 Billion in Aid as Losses Deepen

http://www.bloomberg.com/apps/news?pid= ... efer=home#

March 11 (Bloomberg) -- Freddie Mac, the mortgage-finance company thrust into a leading role in President Barack Obama’s homeowner rescue plans, said it will tap an additional $30.8 billion in federal aid after loan holdings and other assets deteriorated.

More capital may be needed, and the $200 billion in total financing pledged by the U.S. Treasury may not be enough, the McLean, Virginia-based company said today in a Securities and Exchange Commission filing. Freddie, which owns or guarantees more than 20 percent of U.S. home loans, posted a wider fourth- quarter net loss of $23.9 billion, or $7.37 a share.

“These numbers are so mind-boggling,” said Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia. “You can’t even begin to analyze it.”

Freddie and larger competitor Fannie Mae, which together account for about $5.2 trillion of the $12 trillion U.S. residential mortgage market, are part of Obama’s plan to help 9 million Americans avoid foreclosure amid the worst housing slump since the Great Depression.

The federal government took control of the companies on Sept. 6, and has been pressuring management to offer low-cost mortgage refinancings and waive some loan standards to help curb foreclosures. The conflicting demands of appeasing regulators and pursuing profit may have led Chief Executive Officer David Moffett to leave after six months on the job, Miller said.

“They want these guys to refi mortgages without new appraisals and to keep mortgage rates very low,” Miller said. “Those are not sound business decisions. They are being used as a public policy tool to save the housing market. That is just going to make it more difficult for them to be floated out as public companies down the road.”

Housing Slump

Freddie earlier today named non-executive Chairman John A. Koskinen, 69, as interim CEO, and said it would work with its conservator, the Federal Housing Finance Agency, to find a permanent replacement for Moffett.

The company said its net worth, or the difference between assets and liabilities, declined to negative $30.6 billion as of Dec. 31 from negative $13.7 billion on Sept. 30. Freddie took $13.8 billion in aid from the Treasury in November. The year-ago fourth-quarter loss was $2.4 billion, or $3.97 a share.

Freddie’s ability to return to profitability depends on how long the government keeps using the company to push its housing agenda, Miller said.

Washington-based Fannie said Feb. 26 it would draw $15.2 billion in Treasury capital and raised the possibility of asking for more after posting a $25.2 billion fourth-quarter net loss.

‘Deteriorating Effect’

The Obama administration on March 4 said a program using Fannie and Freddie to refinance as many as 5 million loans would have the companies buy mortgages on properties that have less than 20 percent equity without requiring new appraisals or additional mortgage insurance.

The plan also requires the two government-sponsored enterprises, or GSEs, to pay mortgage servicers and borrowers fees to modify troubled loans. Fannie said in its earnings statement that the costs “ will be substantial, and these programs would therefore likely have a material adverse effect on our business, results of operations, financial condition and net worth.”

U.S. Representative Scott Garrett, a New Jersey Republican, said in a statement last week that the refinancing program violates the law and will “have a deteriorating effect on the GSEs, which will result in a higher risk to the taxpayer.”

Writedowns, Losses

Fannie and Freddie were chartered by the government -- and later sold to shareholders -- primarily to lower the cost of homeownership. The companies buy mortgages from lenders, freeing up cash at banks to make more loans. They profit on the difference between their cost of borrowing and the yield on the debt. They also guarantee and package loans as securities for a fee.

Their losses have surged as the U.S. recession cut property values, boosted foreclosures and slowed home sales. In the fourth quarter, Freddie took a $7.2 billion provision for credit losses and expenses, up from $6 billion in the third quarter, and had $13.3 billion in net mark-to-market writedowns mostly because the value of derivatives, mortgage assets and guarantees declined.

FHFA put the companies under its control and forced out management after examiners said the two may be at risk of failing. JPMorgan Chase & Co. CEO Jamie Dimon, speaking before the U.S. Chamber of Commerce in Washington today, called Fannie and Freddie’s growth and collapse “perhaps the largest regulatory failure of all time.”

Moffett Leaves

The Treasury in September pledged to buy $100 billion of each company’s preferred stock as needed when the value of their assets drops below the amount they owe on obligations. On Feb. 18, it doubled that funding commitment.

Moffett, 57, was tapped by regulators to be CEO. The former Carlyle Group executive who was once vice chairman of U.S. Bancorp, “indicated that he wants to return to a role in the financial-services sector,” Freddie said March 2.

Koskinen, a former deputy director of the White House budget office, was also brought in after the takeover to restructure the board and help with oversight of the company. He will return to his position as non-executive chairman once a permanent CEO is found. Director Robert Glauber is filling in as chairman.

Fannie and Freddie shares, which were above $30 in March 2008, have been trading at less than $1 since December. Freddie closed today at 42 cents in New York Stock Exchange composite trading. Fannie was at 39 cents.

Treasury Dividend

Fannie and Freddie have to pay the Treasury a 10 percent annual dividend for access to the federal aid. The cost, which is paid out only if the companies are profitable, will drag down earnings and prolong the companies’ recovery even if the housing market eventually turns around, said Rajiv Setia, a fixed-income strategist at Barclays Capital in New York.

Freddie said the dividend on its original request of $13.8 billion will cost it $1.5 billion annually. If Fannie and Freddie’s losses leave them unable to pay, the unpaid amount will be added to the total outstanding balance of Treasury’s senior investment, and the dividend rate will increase to 12 percent.

The government-run conservatorships won’t end until the mortgage market recovers and the companies regain profitability, FHFA Director James Lockhart said in a Feb. 19 interview.

[iam802]

For those who are interested to look at the Financial Results :

the slides are here

http://www.sec.gov/Archives/edgar/data/ ... xv99w3.htm

[winston]

Fannie Mae and Freddie Mac, the government-sponsored mortgage finance firms, have already received a total of more than $85 billion as part of the Federal bailout program.

But it seems that's not enough, by half. Estimates now forecast the two giants will need about $200 billion total before they can stand on their own two financial feet again.

"We're assuming they each will cross the $100 billion mark fairly soon," Bose George, a mortgage analyst at Keefe, Bruyette & Woods, told CNN.

That figure is pathetically under the $25 billion the Congressional Budget Office forecast last year that Fannie and Freddie would need to regain solvency.

When the CBO made that prediction in July, 2008, it said there was only a 5 percent chance that Fannie and Freddie would ultimately need $100 billion combined, according to CNN.


– Newsmax

[millionairemind]

Just keep milking daddy.... the tax payer...

Aug 7, 2009
Massive loss for Fannie


WASHINGTON - TROUBLED state-backed mortgage firm Fannie Mae took a massive US$14.8 billion (S$21.2 billion) loss in the second quarter, and asked the US Treasury for another US$10.7 billion in aid, the company said on Thursday.

Fannie Mae and its fellow state-backed lender Freddie Mac have already received hundreds of billions of dollars as part of a virtual government takeover aimed at avoiding their collapse in the wake of the subprime mortgage crisis.

'Second-quarter results were driven primarily by US$18.8 billion of credit-related expenses, reflecting the ongoing impact of adverse conditions in the housing market, as well as the economic recession and rising unemployment.

Credit-related expenses were partially offset by fair value gains,' the company said. 'The company also reported a substantial decrease in impairment losses on investment securities, which was due in part to the adoption of new accounting guidance.'

The latest decrease for Fannie Mae came on the heels of a US$23.2 billion loss in the first quarter. 'Taking into account unrealized gains on available-for-sale securities during the second quarter and an adjustment to our deferred tax assets due to the new accounting guidance, the loss resulted in a net worth deficit of US$10.6 billion as of June 30, 2009,' the company said in a statement.

As a result, it said the head of its conservator, the FederaL Housing Finance Agency, submitted a US$10.7 billion request from the Treasury 'in order to eliminate our net worth deficit' on or before Sept 30.

The Washington Post reported on Wednesday that the US government could split Fannie Mae and Freddie Mac and place the firms' toxic assets in a federal corporation.

Such a deal could allow the financial giants, long lynchpins of the US housing market, to move forward unconstrained by troubled assets - easing still constricted credit markets with the hope of driving consumer spending, the report said. Together, the two firms back 40 per cent of all US home loans.

White House spokesman Robert Gibbs insisted that the report was 'light years ahead of any decision-making process here.

'There's no meeting that's scheduled,' he said. 'And safe to say that many senior administration economic officials learned of this proposal sometime this morning at the foot of their driveway.' Staff 'are aware of the problem and working on it as a part of financial regulatory reform', Mr Gibbs added.

However, he cautioned, assuming 'that either this is at a point of even a decision by senior economic officials, let alone anybody that occupies the Oval Office, is way, way, way ahead of itself.' -- AFP