Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC) may have the government all paid back by next year, according to Hamilton Place Strategies. If the projection is true, that tidbit is especially interesting in light of lawmakers’ discussions about what to do with the two government-sponsored entities.
Fannie Mae, Freddie Mac To Become Profitable?
The Washington Post’s Lydia DePillis reports on the firms projections, which indicate that cumulative payments to the U.S. Treasury will surpass the government’s initial investments by early next year. The firm cites “reduced credit losses, increased earnings and a recaptured deferred tax asset.”
Michele Ragazzi's Giano Capital returned 1.9% for March, taking the fund's year-to-date performance to 1.7%. Since its inception, Ragazzi's flagship fund has produced a compound annual return of 7.8%. According to a copy of the €10 million fund's March update, a copy of which ValueWalk has been able to review, Giano's most significant investment at Read More
According to Hamilton Place, the U.S. taxpayer may see as much as $118 billion in profits from the government’s takeover of the two institutions by 2016.
Talks About Fannie Mae And Freddie Mac
Lawmakers have been discussing what to do with Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC). Hedge funds have lobbied for the two organizations to be privatized once again. Lawmakers however, might have different ideas.
There’s been talk of winding down the two organizations and replacing them with new mortgage agencies. Investors in both Fannie Mae and Freddie Mac could lose all of the money they invested in the two companies. They sued the U.S. government earlier this month. The suit does say that it was beneficial to the economy for the government to take over the two companies.
However, it alleges that the Federal Housing Finance Agency (FHFA), which was the government entity which took over Fannie Mae and Freddie Mac, trampled the private ownership rights of shareholders.
Fannie Mae And Freddie Mac Have Improved
A new report from the FHFA was released this month. The report was the agency’s 2012 report on Fannie Mae / Federal National Mortgage Association (OTCBB:FNMA) and Freddie Mac / Federal Home Loan Mortgage Corp (OTCBB:FMCC). In that report, the agency called both entities “significant concerns” in terms of their earnings. That’s still better than the year before however, when they were tagged as “critical concerns” in earnings. What a difference a year can make.