The Federal Housing Finance Authority (FHFA) is the major group that oversees the government sponsored entities Fannie Mae and Freddie Mac. Today, the FHFA has issued 64 subpoenas to a variety of entities; the purpose of these subpoenas is to gather documents regarding certain private-label mortgage-backed securities that both Fannie Mae and Freddie Mac invested in.
The FHFA is hoping that these documents will determine whether PLS issuers are liable to Fannie and Freddie for losses they have incurred on these securities. The Federal Housing Finance Authority is hoping to recoup some of the funds that were lost in these transactions.
If the government sponsored entities do in fact recover funds they would have to use those funds to payback some of the money they have borrowed from the U.S. Treasury.
Fannie Mae (FNMA) is currently being traded at $.34 while Freddie Mac (FMCC) is being traded at $.40.
If these mortgage giants begin to recover it will be interesting to see what if any effect this has on mortgage rates and the housing industry as a whole.
Loading ...
RSS feed for comments on this post.
Leave a comment