|Bid||0.0000 x 0|
|Ask||0.0000 x 0|
|Day's range||1.9800 - 2.0600|
|52-week range||1.2600 - 4.0300|
|Beta (5Y monthly)||2.04|
|PE ratio (TTM)||204.00|
|Earnings date||04 May 2017 - 08 May 2017|
|Forward dividend & yield||N/A (N/A)|
|Ex-dividend date||14 Aug 2008|
|1y target est||1.38|
(Bloomberg) -- Pacific Investment Management Co., one of the world’s biggest bond investors, is warning that a regulator’s push to end federal control of Fannie Mae and Freddie Mac could threaten the U.S. housing finance system by forcing the sale of mortgage bonds and boosting loan interest rates.Pimco executives, in a letter to the Federal Housing Finance Agency, expressed concern that Fannie and Freddie will be freed without congressional legislation, which they said investors would interpret as as abandonment of the government’s guarantee of the companies’ mortgage-backed securities. That would limit some investors’ ability to hold the bonds and force others to drop the securities altogether, the executives wrote in the letter dated Monday.“Mortgage rates will increase, homeownership will likely suffer and the national mortgage rate will no longer exist,” the executives wrote.Pimco’s warning came in a comment letter responding to an FHFA proposal that would require Fannie and Freddie to hold hundreds of billions of dollars in capital. The plan, released by the regulator in May, is considered crucial to ending the companies’ conservatorship because FHFA Director Mark Calabria has said it would allow them to absorb losses outside the government’s grip. Calabria has said he plans to release the companies from U.S. control and that they could try to raise money from investors as soon as next year.Fannie and Freddie don’t make mortgages, but buy them from lenders, wrap them into securities and guarantee to bond investors the repayment of principal and interest. Together, they back nearly half of the $10 trillion mortgage market.Newport Beach, California-based Pimco is one of the world’s largest bond investors and had about $1.92 trillion in total assets under management in June.Explicit U.S. support for Fannie and Freddie was limited before they were placed in conservatorship during the 2008 financial meltdown, but many investors assumed the government would protect their bonds in a crisis. That view was validated by a massive taxpayer bailout after the mortgage market collapsed. The government now has contracts with Fannie and Freddie that guarantee about $254 billion in additional bailout money should the companies need it.Pimco and other bond investors say that agreement isn’t enough, even if Fannie and Freddie are required to hold a lot more capital. They are calling on Congress to pass legislation to provide an explicit U.S. guarantee of the companies’ mortgage securities.U.S. lawmakers have failed in several attempts to pass legislation that would overhaul the nation’s mortgage-finance system. Many of those proposals would have provided an explicit guarantee on some mortgage bonds.Calabria, a libertarian economist who formerly worked for Vice President Mike Pence, has said he plans to release the companies on his own, but he could face difficulty achieving that goal. Imposing high capital requirements would protect taxpayers, but doing so could raise mortgage costs and make it more difficult for Fannie and Freddie to raise money from equity investors.The conflict is reflected in the formal responses to Calabria’s capital proposal. Comment letters from the mortgage industry, affordable housing advocates and equity investors generally said the proposed requirements are too high. Right-leaning think tanks said the proposal is too low.To satisfy MBS investors in the absence of legislation, Pimco said in its letter, Fannie and Freddie would have to hold more than three times the amount of capital proposed by the FHFA, an amount that would likely significant raise mortgage rates and severely curtail the companies’ businesses.So far, the mortgage market doesn’t seem to be reflecting bond investors’ stated worries. As of Friday, Freddie Mac said the 30-year mortgage rate was below 3%.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Fannie Mae and Freddie Mac said a regulator’s plan to boost their capital would increase mortgage borrowing costs for the millions of Americans who rely on the companies to buy homes and asked that the proposal be dialed back.In separate comment letters released Friday, Fannie and Freddie said the new capital requirements proposed by the Federal Housing Finance Agency would likely require the companies to raise the fees they charge to backstop mortgages. Fannie said fees would likely rise 0.2 percentage points on average, after making certain assumptions. Freddie said fees might have to rise between 0.15 percentage points and 0.35 percentage points.The comments come as FHFA Director Mark Calabria continues his push to eventually privatize the companies, which have been in federal control since the 2008 financial crisis. In May, the FHFA proposed that Fannie and Freddie be required to hold about $240 billion in capital combined, based on their September 2019 assets. Increasing their capital is considered crucial in ensuring the companies can absorb losses outside the government’s grip.Read More: Fannie-Freddie Capital Plan Seeks Buffers Above $200 BillionFannie and Freddie don’t make mortgages themselves. They buy them from lenders, wrap them into securities and guarantee to investors the repayment of principal and interest. The fees they charge are generally passed on to borrowers in the form of higher mortgage rates.Crimping EarningsPrivatizing the companies has proved easier said than done. High capital requirements better protect taxpayers from the need for future bailouts but also have the likelihood of making it more costly for borrowers to get loans. Stringent standards also could make it harder for Fannie and Freddie to raise money from investors through share sales, as investors might fear the restrictions would crimp the companies’ earnings.In Fannie’s letter, officials said they were concerned the FHFA didn’t strike the right balance and proposed adjustments to ensure the new rule “does not impede the Enterprises’ achievement of their mission or complicate the path to ending conservatorship.” Both companies said that the need for higher fees could end up shrinking their businesses by pushing lenders and borrowers to other outlets for mortgage financing.FHFA officials have said they hope to finalize the new capital standards by the end of this year.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Fannie Mae and Freddie Mac will extend their suspension of mortgage foreclosures through at least the end of the year, providing more relief for homeowners who are grappling with the economic pain of the coronavirus.A moratorium on evictions from properties owned by Fannie and Freddie will also be extended until at least Dec. 31, the Federal Housing Finance Agency said in a Thursday statement. The relief on foreclosures and evictions were both set to lapse at the end of the month.The extensions are intended to keep consumers from being kicked out of their residences even if they can’t pay their mortgage or rent amid a surge in layoffs and lost income. In statements, Fannie and Freddie said the eviction moratorium applies to properties that they’ve obtained as a result of foreclosures. The eviction suspensions don’t apply to tenants living in homes that have not gone into default, Fannie and Freddie said.FHFA Director Mark Calabria, whose agency regulates Fannie and Freddie, said the extensions will protect more than 28 million borrowers with a loan guaranteed by the companies. The move will add $1.1 billion to $1.7 billion to the expenses that Fannie and Freddie have already absorbed due to the coronavirus, the FHFA projected. The companies backstop about $5 trillion of home loans.Congress has also protected homeowners from foreclosures by allowing borrowers affected by the pandemic to delay their monthly payments for more than a year without going into default. That provision was part of the $2 trillion stimulus bill that lawmakers approved in March.FHA ReliefFannie and Freddie, which have been under government control since the 2008 financial crisis, don’t make loans. Instead, they buy mortgages issued by lenders and package them into securities that are sold to investors. Bondholders are guaranteed payment even if borrowers default.The Federal Housing Administration, which is part of the Department of Housing and Urban Development, also extended its suspensions of foreclosures and evictions until the end of the year. The FHA helps lower-income Americans and first-time buyers obtain loans by insuring their mortgages.Democratic lawmakers said the relief provided by the FHA and Fannie and Freddie falls far short of what’s needed to prevent a potential foreclosure and eviction crisis.House Financial Services Committee Chairwoman Maxine Waters argued in a statement that the FHA move “does not help one renter” because it only covers people living in properties that HUD has obtained through a foreclosure.Sherrod Brown, the top Democrat on the Senate Banking Committee, urged the Trump administration and Republican lawmakers to work with Democrats on legislation that will provide “vital assistance” to keep renters and homeowners in their residences, according to a statement.(Updates with comments from Democratic lawmakers starting in ninth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.