RSS 2.0Atom
To add an specific blogger’s feed, simply go to their blog and click on their individual RSS link.
Betty La Fea (aka Fannie Mae) - Question of the Week
Rating: 0.70 (23 votes)
Vote: 
InvestorPlace Blogs is powered by Marketocracy. Marketocracy has authorized Investor Place Blogs as an official registrar for voting through Marketocracy's Investment Research Rating service. Registered members of InvestorPlace Blogs are linked with a Marketocracy account to establish voting power based on their performance of trading and posting on stocks.
You have GOT to be kidding. "Do you agree with Ken that Fannie Mae is the smart way to profit from the subprime meltdown? Would you add the stock to your portfolio?" -- No! I don't care that FNM deals mostly with "conforming loans". Their decisions have been bad enough that investors are selling. Granted, their stock price drop has been less than their Government Sponsored Enterprise (GSE) siblings FRE and SLM. This is some sort of accomplishment, especially since SLM is down even though it does have loans which are guaranteed by the US government whereas FNM does not. However, brother AGM has dropped less than FNM. In addition, although sister Ginnie Mae (owned by the US government) is not publicly traded, Fidelity's Ginnie Mae Mutual Fund (FGMNX) has actually held even! I believe we do need loan secondary markets and loan guarantees. But why do FNM, FRE and AGM have "Govt. Sponsored Enterprises" (GSE) status and therefore the ability to raise funds they need at lower cost than other corporations? As far as I can see, this "status" is meaningless. The government does not guarantee these loans, nor does it manage these corporations. The public is just now waking up to this fact and the public is not happy. Therefore, I think FNM's stock price will go even lower. FNM's price is approaching book value and will, at some point, become a decent deal. However, their bottom line is down and the mortgage industry will be stagnant for some time. There are plenty of better industries to invest in at the moment. Eventually, when the mortgage industry picks up again, FNM may be the best, undervalued stock to pick up. But I'll bet you a chocolate milkshake that a brilliant, young banker will put together a new corporation which will fulfill the same role, regain everyone's shattered confidence and pick up all the business. | ||
Comments (2)
I want to echo your NO loud and clear. I think the mortgage industry will be dead money for two to three years.
Posted by Rebecca Witwer | November 19, 2007 8:12 PM
Ursine Male Bovine,
...I would give Fannie a good Spankin' but I think that she would Like IT a li'l too much ( a little too little & a LOT too Much - New Orleans Big EZ Cajun-style - wink, Wink )
...Fannie was originally chartered by Congress to encourage Home-ownership ( taking off where Savings&Loans [Building Societies to the Britz out there in the Blog-O-Sphere] left Off). It was then Spun-out to John Q. Public while Keeping the implicit GSO ( Government Sponsored Organization ) 'full faith & credit ' Panache. It competes with free-market Banks and other Mortgage-originating Financial Institutions by having a "Government" Co-signed AAA Credit Rating - no risk to the purchasers of it's bundled Mortgage-backed Bonds. Fannie is a Political Animal - the politicos tell Fannie what to do to achieve Social & political 'Targets' ( like VOTES ). It has been a Public Scandal rife with Malfeasance of office, 'Political' Hack appointments, Shills for partisan politics, etc. Nobody goes to jail, only a few straw-dog Judas Goats leave to 'pursue other other interests' - mainly comfy, sheltered 'public' or quasi-governmaental ( NGO's)jobs.
...Congress , which is dealing with an $8 Trillion debt-load has made 'veiled threats' about withdrawing the vaunted backing of the Government Largess to 'Make Good' on ALL the problems incurred by such Moronic policies & non-economic organization behavior.
...The Banks are allowed to make no-doc and/or low-doc mortgage loans on the basis of a pay-check stub ( and a Fantasy notion of the Assessed value of the under-lying Properties ) & after 90 days of 'aging' or as was indicated above "conforming", Fannie can acquire these loans for 'securitization' & sale to a gullible ( but Federally Guaranteed ) public. The 90 day aging is Totally financed by Escrow funds deposited in the mortgage originating institutions at 'closing time', so there is no way that a loan can go 'sour' in the 'aging' period after which it is unceremoniously dumped on Fannie ( also flippantly called 'Flipping'). The politically connected & politically protected banking system just goes out & repeats the proceess, over & over, reaping large Origination fees, Closing costs, etc. Real Estate agents, developers,builders, Banks and others Profit up-front and the Pain of the Ultimate Bill goes to the TAXPAYER. Everybody SUCKS on the TaxPayer's FUTURE Obligations. It's like a time-delayed, ticking Time-Bomb.
A bet on Fannie Mae is a bet that a politically corrupt & morally bankrupt System will be 'Allowed' to continue to exist by an un-informeed public who's government by Lies of Omission & Lies of Commission keeps them in the Dark ( like insentient mushrooms ).
... this is Thanksgiving, so I;m sort of Mellow right NOW. Later on, ask me what I REALLY think about this subject.
...Moving on to the 'Religious' material - " who IS worse - the deceiver or the deceived?"
Answer - the deceived, every time, all the time. You get exactly what you should expect;never what you Think you Deserve.
...There has been a mass Exodus of the so-called Creative Class out of America - to New Zealnd, Australia, Europe,Dubai,Hong Kong, etc. WHY? Go figure, but don't even think about sending THEM the Bill for this Socialistic Fiasco.
I'm Thruuuu.
VikingWarrior
Posted by | November 22, 2007 11:42 PM