Fannie and Freddie once again posted strong earnings but the results would have been even better if not for large hedging charges. (Includes data chart.)
Based on current earnings, it will take until 4Q20 or 1Q21 for Fannie to accumulate its statutory minimum capital requirement. For Freddie, the wait will be a little longer — until the 2Q21.
Even though the two companies have paid Treasury about $250 billion over seven years, most of that was interest. They may still owe nearly $118 billion in principal.
FHFA Director Mark Calabria hopes to hire an advisor by next month. He said Fannie and Freddie will need to hire advisors too to help through the recap-and-release process or any possible public offering.
Industry watchers expect David Lowman to join one of the rising fintech firms after he leaves the GSE by the end of the month. Donna Corley will take over as interim EVP.
Fannie and Freddie will be able to retain all their second-quarter profits, rather than forward them to Treasury. Combined, the GSEs will add $5.2 billion to their net worth this month.
SOFR-linked debt is vulnerable to much higher rate volatility than those referencing LIBOR. This risk was highlighted last month when surging repo rates sent SOFR briefly to a record 5.25%.
Moves by the Trump administration are disrupting the economy and the federal agencies that deal with the housing market. Bob Broeksmit, president and CEO of the MBA, isn’t sure how it’s all going to play out.
Is Onity Group eyeing a sale? Perhaps. And why not? Servicing values are approaching a 25-year high.
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