navycmdr
15 minutes ago
New FHFA Director Bill Pulte is focused on GSE reform
Vows to fix underperformance of Fannie and Freddie "effective immediately!"
March 13, 2025 - By Sarah Wheeler
https://www.housingwire.com/articles/new-fhfa-director-bill-pulte-is-focused-on-gse-reform/
In a series of tweets Thursday evening, newly confirmed FHFA Director Bill Pulte made it clear
that pulling Fannie Mae and Freddie Mac out of conservatorship is his top priority and wrote:
“big announcements coming soon.” -
After reposting news of his Senate confirmation and thanking specific Senators and supporters,
Pulte put out these statements from his page on X as separate tweets:
“Under President Trump’s leadership of the housing market, Fannie Mae and Freddie Mac have
great potential to, safely and soundly, unleash opportunity for more Americans to realize
the American Dream”
“There are over 15,000 employees between Fannie Mae and Freddie Mac”
“For far too long, Fannie Mae and Freddie Mac have been underperforming (compared to where
they should be at) as companies and in Safety and Soundness but now, thanks to President Trump
and his Golden Age of Housing, we will fix it, Effective Immediately!”
“Fannie Mae and Freddie Mac are great American Icons, and under President’s leadership of
America, they will return (safely and soundly) to their Glory!”
The choice of Pulte, the grandson of William J. Pulte who built a namesake homebuilding empire,
to lead FHFA has been cheered by those in the housing industry, who see him an ally who
understands the challenges of the housing market.
Trump wants to finish what he started in his first term
It is widely expected that the Trump administration will finish what they started in his first term
and privatize Fannie and Freddie. Although likely a years-long process, the administration
started laying the groundwork at the start of the year, when the Treasury Department and
FHFA announced an agreement to amend the Preferred Stock Purchase Agreements (PSPAs)
with Fannie and Freddie, which owe $330 billion in senior preferred stock to Treasury.
In a news release at the time, Treasury said that the amended agreement would “help ensure
that the eventual release of the GSEs from conservatorship will be orderly and to reflect
certain existing practices.”
An orderly exit
The orderliness of the exit process is a theme for anyone talking about the exit, including Pulte
in his confirmation hearing in February.
“While their conservatorship should not be indefinite, any exit from conservatorship must be
carefully planned to ensure the safety and soundness of the housing market without upward
pressure on mortgage rates,” he said.
The Mortgage Bankers Association has made a safe and sound exit the cornerstone of their
advocacy since the election. During the MBA’s IMB conference in January, MBA CEO Bob
Broeksmit identified four overarching principles the trade group believes should frame the
release of Fannie and Freddie:
--- An explicit backstop. “Without it, global investors’ confidence buying, holding and selling
GSE mortgage-backed securities could be jeopardized, which would greatly impact liquidity
in the market and drive rates up even higher than they are today,” Broeksmit said.
--- A level playing field. FHFA must ensure “that pricing and underwriting does not vary for a
lender based on size, business model or charter.”
--- The bright line between primary and secondary market functions. This must be “clearly defined
and rigorously enforced by FHFA.”
--- Regulatory enhancements at FHFA. FHFA should be granted “the necessary powers and
responsibilities to regulate the GSE rate of return and market conduct, often viewed as
utility style authorities.
Rodney5
25 minutes ago
“then the government nationalized it.”
Justice Breyer did not separate the two entities in this statement: The FHFA and Treasury is the government.
JUSTICE BREYER Quote: “Thank you. I think in reading this you could, with trying to simplify as much as possible, do you -- the shareholders' claim as saying we bought into this corporation, it was supposed to be private as well as having a public side, and then the government nationalized it. That's what they did. If you look at their giving the net worth to Treasury, it's nationalizing the company.
Rodney5
37 minutes ago
stockprofiitter, the haters on this board will argue the FHFA is a separate entity from the Treasury So, Treasury did nothing wrong. Ha !! Both agencies’ head, FHFA Director and the Secretary of Treasury, are appointed by the President and confirmed by the Senate, two government agencies in collusion committed fraudulent harm against the Shareholders.
Rodney5
59 minutes ago
2latefortears, absolutely correct. Quote: “the Net Worth Sweep causes permanent and ongoing harm to private shareholders by making it impossible for them to ever receive anything from the Companies, and by giving everything to Treasury.” End of Quote
FHFA and its Director are executive branch entities. They can not make changes to federal laws. Only Congress can change the law.
Therefore, the U.S. Congress did not give DeMarco the power to take all the future profits of their wards in conservatorship into perpetuity, thus Nationalizing the GSES, based on an Incidental Power in HERA: The Net Worth Sweep.
The U.S. Congress would have given the FHFA more explicit instructions to do so than merely drafting in the HERA to do whatever it feels is in its best interests. DeMarco, this non-elected bureaucrat, has been allowed to steal the companies for the Treasury.
The Supreme Court of the United States concluded the terms of the ‘Net Worth Sweep’ Treasury sweeping all the net worth of the companies does not change the fact the liquidation preference can be paid down and the Senior Preferred Stock redeemed under the terms of the law of HERA. The money kept by the Treasury by the NWS should be applied to principle and over payment should be returned to the companies. $301 billion is more than enough to pay the liquidation preference and redeem the Senior Preferred Stock.
JUSTICE BREYER Quote: “Thank you. I think in reading this you could, with trying to simplify as much as possible, do you -- the shareholders' claim as saying we bought into this corporation, it was supposed to be private as well as having a public side, and then the government nationalized it. That's what they did. If you look at their giving the net worth to Treasury, it's nationalizing the company. Now, whatever conservators do and receivers do, they don't nationalize companies. And when they nationalized this company, naturally they paid us nothing and our shares became worthless. And so what do you say?”
All the lawsuits challenged the actions of the Conservator within the terms of the SPSPA... AND The Supreme Court basically said we will not rule or give Judgment are act as an arbitrator on the contract the SPSPA. So, the NWS was not validated as legal or illegal by the Court: The Court dismissed the lawsuit.
SPSPA which is a contract. 4617f bars courts from questioning the actions of a conservator.
THE PLAINTIFFS BROUGHT THE WRONG LAWSUIT.
We hold that the stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f).
Millett and Ginsburg summarized the case and their 70-page opinion as follows:
Quote: “A number of Fannie Mae and Freddie Mac stockholders filed suit alleging that FHFA’s and Treasury’s alteration of the dividend formula through the Third Amendment exceeded their statutory authority under the Recovery Act, and constituted arbitrary and capricious agency action in violation of the Administrative Procedure Act, 5 U.S.C. § 706(2)(A). They also claimed that FHFA, Treasury, and the Companies committed various common-law torts and breaches of contract by restructuring the dividend formula.
We hold that the stockholders’ statutory claims are barred by the Recovery Act’s strict limitation on judicial review. See 12 U.S.C. § 4617(f). We also reject most of the stockholders’ common-law claims. Insofar as we have subject matter jurisdiction over the stockholders’ common-law claims against Treasury, and Congress has waived the agency’s immunity from suit, those claims, too, are barred by the Recovery Act’s limitation on judicial review. Id. As for the claims against FHFA and the Companies, some are barred because FHFA succeeded to all rights, powers, and privileges of the stockholders under the Recovery Act, id. § 4617(b)(2)(A); others fail to state a claim upon which relief can be granted. The remaining claims, which are contract-based claims regarding liquidation preferences and dividend rights, are remanded to the district court for further proceedings.“ End of Quote
Link: https://www.washingtonpost.com/news/volokh-conspiracy/wp/2017/02/21/d-c-circuit-concludes-recovery-act-bars-judicial-review-of-suits-against-fhfa-over-treatment-of-fannie-and-freddie-shareholders/
lordsmoney
3 hours ago
This jury verdict excludes Fannie Mae common holders, right? It came to me after reading the article from two years ago. I wonder how each of the stocks will move on Monday.
SEPTEMBER 8, 2023
In Rare Jury Trial, Fannie Mae and Freddie Mac Shareholders Recoup $612 Million Against U.S. Housing Agency
Fannie Mae and Freddie Mac Shareholders vs US Housing Agency
A federal jury awarded shareholders of Fannie Mae and Freddie Mac $612.4 million in a landmark jury verdict against the Federal Housing Finance Agency (FHFA) for improperly sweeping up the companies’ profits to the U.S. Treasury. In a unique class action against the federal government, the jury found unanimously that the FHFA breached the implied terms of their contracts with shareholders, causing Fannie Mae and Freddie Mac’s stock to lose significant value.
The shareholder victory resolves decade-old allegations – related to the 2008 financial crisis takeover – that the FHFA changed the terms of a stock purchase agreement to transfer the mortgage financing institutions’ profits to the U.S. Treasury. The jury determined that the FHFA acted “arbitrarily or unreasonably” in carrying out this “Net Worth Sweep” in violation of the covenant of good faith and fair dealing inherent in the companies’ stock certificates.
In September 2008, at the height of the financial crisis, the FHFA placed Fannie Mae and Freddie Mac into conservatorship, giving FHFA authority to run the companies until they were stabilized. Under the conservatorship, the Treasury bought senior preferred stock of the companies in exchange for a 10% annual dividend, as memorialized by a stock purchase agreement between the FHFA, the Treasury and each company. The Treasury ultimately invested a total of $189 billion in Fannie Mae and Freddie Mac in order to backstop the nation’s housing finance system.
Four years later, the FHFA changed the terms of the takeover agreement, allegedly sweeping Fannie Mae’s and Freddie Mac’s net profits up to the U.S. Treasury every quarter since 2012. Plaintiffs claim that the “Net Worth Sweep” – made just as the companies were returning to profitability – effectively prevented shareholders from receiving dividends or distributions of their own again. Indeed, according to shareholders, the Treasury received over $150 billion in dividends in excess of what it would have received under the original stock agreement; and the companies still remain in conservatorship – designed to be temporary – after fifteen years.
Plaintiffs specifically sought $1.6 billion in damages related to the drop in value that the stocks collectively fell on August 17, 2012 when the Net Worth Sweep was announced. Defendants countered that the decision to amend the stock purchase agreement was reasonable in light of the FHFA’s power to act in the best interest of the public and secondary mortgage market.
This case was initially tried before a jury in October 2022, but ended in a mistrial after a 4-4 “hung” jury. In a retrial, a Washington D.C. jury found in favor of shareholders and awarded them about a third of their requested damages. The jury determined Fannie Mae and Freddie Mac junior preferred shareholders should receive $299.4 million and $281.8 million, respectively. Freddie Mac common stockholders were awarded $31.2 million. It is likely that the FFHA will appeal the decision.
https://insights.issgovernance.com/posts/in-rare-jury-trial-fannie-mae-and-freddie-mac-shareholders-recoup-612-million-against-us-housing-agency/
Viking61
8 hours ago
Those that are new to the page, I apologize for our seeming lack of impatience. Many of us here have been going at this for multiple years. We have read, researched, speculated, about everything there is on these two stocks. Over and over and over through out the years. There are a few here that have been cornerstones of information. Navy, is one of them that has kept this page up to date with multitudes of information throughout the years. Many of us have gleaned knowledge from him and others for all of seventeen years.
Welcome to the board and please delve into the knowledge here but also respect those that have given of themselves for many years unselfishly to make this board what it is today. As always GLTA!
navycmdr
10 hours ago
Pulte promises to make Fannie and Freddie ’great again’ following confirmation
Frank DeMatteo- Published 03/14/2025,
Investing.com -- Recently confirmed Trump administration Federal Housing Finance Agency director, William Pulte, wants to make Fannie Mae (OTC:FNMA) and Freddie Mac (OTC:FMCC) great again.
“Fannie Mae and Freddie Mac are great American Icons, and under President’s leadership of America, they will return (safely and soundly) to their Glory!,” Pulte said in an X late Thursday.
Pulte is the grandson of Pulte Homes (NYSE:PHM) founder William Pulte, one of America’s largest home builders. He is a former private equity investor and self-proclaimed “inventor of Twitter philanthropy.” He founded the nonprofit group Detroit Blight Authority, which focuses on removing abandoned and run-down properties in Detroit.
Pulte was confirmed in a 56-43 vote by the U.S. Senate on Thursday and has issued several tweets since.
“For far too long, Fannie Mae and Freddie Mac have been underperforming (compared to where they should be at) as companies and in Safety and Soundness but now, thanks to President Trump and his Golden Age of Housing, we will fix it, Effective Immediately!,” Pulte added.
Pulte added that he will immediately review their 2025 budgets for Fannie and Freddie, which generate over $30 billion in annual earnings. In addition, he said getting rid of mortgage fraud will be one of his main focuses.
Shares of both companies have surged since Trump’s election victory on November 5th on hopes they will be released from U.S. conservatorship.
Fannie is up 313%, while Freddie is up 282% since the election.
2latefortears
11 hours ago
In short, Defendants are wrong to assert that the only evidence of harm from the Net Worth
Sweep was the one-day drop in stock price on the date it was announced. The Court is satisfied
that a reasonable jury could conclude, based on the evidence presented at trial, that current
shareholders are harmed by the Net Worth Sweep.
Defendants’ next challenge regarding damages is that Plaintiffs failed to account for the
increases in share prices that occurred in the weeks following the August 17, 2012 price drop.
Defs.’ Mot. at 39. But the jury was free to conclude that those rebound share prices were irrelevant
in the ultimate finding of harm to current shareholders. “That positive developments at the GSEs
caused price increases is in no way inconsistent with this fundamental fact: the Net Worth Sweep
causes permanent and ongoing harm to private shareholders by making it impossible for them to ever receive anything from the Companies, and by giving everything to Treasury.”
8 To reiterate, the market value of the GSE shares declined by a total of $1.6 billion on the day the Third Amendment
was announced.
Case 1:13-cv-01053-RCL Document 439 Filed 03/14/25 Page 17 of 22
33. The Net Worth Sweep is “a fundamental and permanent change to the capital structure of the
company,” permanently alienating shareholders from the profits of the GSEs, which remains in
place to this day. Opp’n at 34. That is the entire point of Plaintiffs’ “lost-value” theory that this
Court allowed to proceed to trial. The factual significance of the post-Third Amendment share
price increases was properly turned over to the jury to determine, and the Court will not disturb
the jury’s conclusion—that current shareholders experience harm from the Net Worth Sweep,
despite the share price increase in the weeks following its announcement.
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RickNagra
9 hours ago
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10 hours ago
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