Tag Archives: Fannie Mae

Business, Finance, Occupation & Industry

Stock Futures Point to a Higher Open on Wall Street

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By IBTimes

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By Sreeja VN

U.S. stock index futures point to a higher open on Wall Street on Tuesday, ahead of the publication of the House Price Index and corporate earnings statements from tech majors Apple, AT&T and Electronic Arts.

Futures on the Dow Jones industrial average(^DJI) were up 0.3 percent, while futures on the Standard & Poor’s 500 index (^GSPC) were up 0.1 percent and those on the Nasdaq 100 index were up 0.3 percent.

Investors will also be turning their attention to the publication of the Federal Housing Finance Agency House Price Index at 9 a.m. Eastern time. The index provides the monthly average change in house prices across the country or a certain area, using data provided by Fannie Mae and Freddie Mac. The index is expected to nudge up to 0.8 percent in May, from 0.7 percent recorded in the previous month.

In addition, a number of major companies, including United Parcel Service (UPS), Altria Group (MO), Lockheed Martin (LMT), MGIC Investment (MTG), Wendy’s (WEN) will announce quarterly earnings before market hours. Altera (ALTR) and Broadcom (BRCM), along with Apple (AAPL), AT&T (T) and Electronic Arts (EA), will announce their earnings after markets close.

European markets were trading flat after climbing higher earlier Tuesday, as Asian markets rallied following recent reports from China indicating Beijing might take measures to support the country’s economic growth, and the Japanese government upgraded its outlook of the country’s economy for a third consecutive month.

The Stoxx Europe 600 index rose 0.1 percent, London’s FTSE 100 was flat, Germany’s DAX-30 was up 0.1 percent and France’s CAC-40 was trading up 0.05 percent.

In Asia, Chinese stocks led a rally in the region’s markets, with the Shanghai Composite index surging 2 percent while Hong Kong’s Hang Seng Index soared 2.3 percent. Shares jumped after several local media reported that Premier Li Keqiang, at a cabinet meeting last week, gave an assurance that the government won’t allow China’s economic growth to fall below 7 percent.

Japan’s Nikkei ended up 0.8 percent after the government said that the recovery in the world’s third-largest economy had turned self-sustaining, MarketWatch reported. South Korea’s KOSPI Composite index rallied 1.3 percent, Australia’s S&P/ASX 200 added 0.3 percent and India’s BSE Sensex was trading up 0.8 percent in late-afternoon trade.

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Source: FULL ARTICLE at DailyFinance

News, Politics, Government

Why Hedge Funds Suing The Government Over Fannie And Freddie Have A Bad Case

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By Nathan Vardi, Forbes Staff

With the housing market collapsing in July 2008, President George W. Bush signed the Housing and Economic Recovery Act into law, 260 pages aimed at bolstering mortgage giants Fannie Mae and Freddie Mac and overhauling the regulations of these government-sponsored entities that were crashing. The law created the Federal Housing Finance Agency and gave it the authority to place Fannie Mae and Freddie Mac into conservatorship and regulate the GSEs. A few weeks after Bush signed the law, the FHFA placed Fannie Mae and Freddie Mac into conservatorship and the Treasury Department started to inject $188 billion into the GSEs in return for senior preferred stock. …read more

Source: FULL ARTICLE at Forbes Latest

Business, Finance, Occupation & Industry

Bank of America to Pay $500M to Settle Investor Lawsuit

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By The Associated Press

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By CHRISTINA REXRODE

NEW YORK — As soon as Bank of America puts one mortgage-related lawsuit behind it, another always seems to rear its head.

The bank announced Wednesday that it would pay $500 million to settle a class-action lawsuit led by pension funds and other investors who say they were misled about $350 billion worth of mortgage-backed investments they bought from Countrywide, a mortgage lender Bank of America Corp. (BAC) bought in 2008. The bank portrayed the settlement as good news because it resolved the bulk of securities claims related to residential mortgage-backed securities.

But financial analysts, in a conference call to discuss the bank’s first-quarter results, peppered bank executives with questions about another pending settlement. Bank of America is still waiting for court approval for a similar settlement it made with Bank of New York Mellon Corp. (BNY) almost two years ago. If it doesn’t get the go-ahead, Bank of America could have to spend more to resolve the claims.

Bank of America’s stock slumped nearly 5 percent to $11.70. While its earnings were just shy of what analysts expected, it was the bank’s latest liability from mortgage lawsuits that “seems to be the big question for investors,” banking analyst Meredith Whitney said on the conference call.

Chief Financial Officer Bruce Thompson told analysts that the bank felt “very good” about settling the pension funds’ lawsuit. But he acknowledged the uncertainty of potential lawsuits and declined to predict how much the bank might have to spend on litigation in the future.

“I don’t think anyone is going to ever, at this point, declare complete victory,” Thompson said, though he added that the bank was moving through “this pipeline of items” in “a pretty meaningful way.”

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Bank of America’s current troubles are the latest fallout from its decision to buy Countrywide, which was known for making exotic mortgages that later went bad as borrowers defaulted. The purchase catapulted the bank into a spot at the top of the nation’s mortgage scene, but it’s been an albatross ever since, bringing lawsuits, investigations and quarterly losses. Hard-to-predict legal expenses have been a bane to Bank of America and throughout the banking industry.

It was just last quarter that two mortgage-related settlements overshadowed the bank’s results. In early January, the bank took a charge of $2.7 billion to settle a dispute with Fannie Mae, which forced Bank of America to buy back mortgages it had sold to the agency before the crisis. It also took a $1.1 billion charge to settle government accusations that it and other banks had wrongfully foreclosed on some homeowners. The charges sent fourth-quarter earnings down sharply.

Brian Moynihan has been wading through issues dating back to the financial crisis ever since he became CEO in

From: http://www.dailyfinance.com/2013/04/18/bank-america-lawsuit/

News, Politics, Government

Mark Zandi for FHFA Director

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By Richard Green, Contributor On a day filled with bad news, I was pleased with one item in my inbox today–a link to a Wall Street Journal piece that says Mark Zandi might become the Director of the Federal Housing Finance Agency (FHFA), the agency that oversees Fannie Mae and Freddie Mac.

From: http://www.forbes.com/sites/richardgreen/2013/04/15/mark-zandi-for-fhfa-director/

Business, Finance, Occupation & Industry

This Mortgage REIT Will Soon Dwarf Annaly

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By Amanda Alix, The Motley Fool

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When it comes to double-digit returns, it’s hard to beat the mortgage REIT sector, particularly since Federal Reserve actions since the financial crisis have kept short-term interest rates at historic lows. The shining example of this type of real estate investment trust is Annaly Capital , the original investor in mortgage-backed securities insured by government sponsored entities such as Fannie Mae and Freddie Mac.

Annaly has built its reputation on stellar yields produced by a savvy management team, building the business from its inception in 1997 to a company with a market capitalization of $15 billion and assets topping $133 billion. But there’s a relative newcomer that seems intent on knocking Annaly off of its throne: American Capital Agency .

A great year for mortgage REITs
American Capital Agency went public in 2008, a year that saw other mREITs such as Hatteras Financial , and Armour Residential  enter the territory as well. Groundbreaker Annaly had shown that the carry trade could be lucrative, and the ultra-low short-term interest rate environment created a perfect climate for new companies to enter the playing field.

Both Hatteras and Armour have been successful, but American Capital Agency, under the guidance of Gary Kain, has seen explosive growth in its short life. While Hatteras’ market cap sits at less than $3 billion and Armour’s is under $2.5 billion, American Capital Agency sports a $13 billion capitalization. Annaly’s current market cap is $15 billion, showing that American Capital is hot on its heels and could overtake the venerable mREIT in short order.

Too big, too fast?
American Capital Agency has accrued nearly as much in assets as Annaly, too. At the end of 2012, the trusts held approximately $100.5 billion, and $133.5 billion, consecutively, and it looks like Annaly may lose its premier spot sooner rather than later: American Capital Agency held a mere $58 billion in assets at the end of 2011, meaning that it nearly doubled its asset base in one year’s time. How did it accomplish this?

Most of the credit for the trust’s growth and success belongs to Kain, a shrewd manager who cut his teeth overseeing billions of dollars in assets at Freddie Mac. When Kain took over the reins at American Capital Agency in 2009, the company had only $2 billion in assets. Kain began building it up to its current robust level by taking advantage of lucrative financing opportunities, and using the insights gained at his former employment to reinvest in and grow the company.

Certainly, the exponential growth experienced by American Capital Agency is unusual, but there seems to be no cause for alarm. The trust still pays out a hefty $1.25 quarterly dividend, even as it approaches the girth of Annaly — something that other mREITs must envy. As American Capital Agency continues its inexorable rise, its investors are no doubt happy to go along for the ride.

There’s no question Annaly Capital‘s double-digit dividend is eye-catching. But …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Anworth Announces Increase to Series B Preferred Stock Conversion Rate

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By Business Wirevia The Motley Fool

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Anworth Announces Increase to Series B Preferred Stock Conversion Rate

SANTA MONICA, Calif.–(BUSINESS WIRE)– Anworth Mortgage Asset Corporation (NYS: ANH) announced today that, in accordance with the terms of Anworth’s 6.25% Series B Cumulative Convertible Preferred Stock, or Series B Preferred Stock, the conversion rate of the Series B Preferred Stock will increase from 3.8370 shares of Anworth’s common stock to 3.8695 shares of its common stock effective April 9, 2013.

As previously announced on March 28, 2013, Anworth’s board of directors declared a quarterly common stock dividend of $0.15 per share, which is payable on April 29, 2013 to holders of record of common stock as of the close of business on April 8, 2013. When Anworth pays a cash dividend during any quarterly fiscal period to its common stockholders in an amount that results in an annualized common stock dividend yield greater than 6.25% (the dividend yield on the Series B Preferred Stock), the conversion rate on the Series B Preferred Stock is adjusted based on a formula specified in the Articles Supplementary Establishing and Fixing the Rights and Preferences of the Series B Preferred Stock (and also available on the “Series B Pfd. Stock Conversion” page of Anworth’s web site at http://www.anworth.com). As a result of this dividend, the conversion rate will increase from 3.8370 shares of Anworth’s common stock to 3.8695 shares of its common stock effective April 9, 2013.

About Anworth Mortgage Asset Corporation

Anworth is an externally-managed mortgage real estate investment trust. We invest primarily in securities guaranteed by the U.S. Government, such as Ginnie Mae, or guaranteed by federally sponsored enterprises, such as Fannie Mae or Freddie Mac. We seek to generate income for distribution to our shareholders primarily based on the difference between the yield on our mortgage assets and the cost of our borrowings. We are managed by Anworth Management, LLC, or the Manager, pursuant a management agreement. The Manager is subject to the supervision and direction of our Board of Directors and is responsible for (i) the selection, purchase and sale of our investment portfolio; (ii) our financing and hedging activities; and (iii) providing us with management services and other services and activities relating to our assets and operations as may be appropriate. Our common stock is traded on the New York Stock Exchange under the symbol “ANH.”

Safe …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

One Word You'll Rarely Hear on Wall Street

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By Buck Hartzell, The Motley Fool

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I recently had a fascinating discussion with Lawrence Cunningham, author of The Essays of Warren Buffett: Lessons for Corporate America. The 3rd edition of this business classic has just been released.

Cunningham, professor of law at George Washington University, is one of the sharpest students of Warren Buffett in the world, and his insights are potentially quite valuable for investors and business leaders alike. Below is perhaps the most important lesson from my discussion with professor Cunningham.

A common Buffett word is unpopular on Wall Street
Cunningham actually put all of Buffett’s Berkshire Hathaway shareholder letters into a word cloud, and discovered that the word “mistake” was one of the most common ones used.

Curious, I searched several annual reports from some other leading financial firms for the word “mistake” and guess what I found?

  • AIG‘s 2008 annual Report: 0 mentions.
  • Bank of America‘s 2009 annual report: 1 mention in boilerplate text over 600+ pages in.
  • Citigroup‘s 2008 annual report: 0 mentions.
  • JP Morgan Chase‘s 2012 annual report: 1 mention on page 315 of the PDF in relation to legal disclosures.
  • Fannie Mae‘s 2008 annual report: 2 mentions in a section on pension plan administration saying that no committee member is personally liable for even mistakes of judgment and the corporation will indemnify and hold harmless any employee, officer, or director. This feels like the opposite of admitting a mistake. Instead, the company is saying that it is going to protect its employees regardless of how poor their decisions are.

I think it’s fair to say that these companies could have used the word “mistake” just a bit more regularly, when writing about their recent history. Then again, it shouldn’t surprise us all that much that they didn’t use that word.

A word cloud created from JP Morgan’s 2011 shareholder letter.

The best organizations can admit to and learn from their mistakes, while poorly led firms will avoid mentioning them no matter what. If a company is unwilling or unable to acknowledge a mistake, how could it possibly learn from it?

Click here to read the entire transcript of my fascinating interview with professor Cunningham.

link

The article One Word You’ll Rarely Hear on Wall Street originally appeared on Fool.com.


Buck Hartzell owns shares of Berkshire Hathaway, Berkshire Hathaway, and American International Group. The Motley Fool recommends American International Group and Berkshire Hathaway. The Motley Fool owns shares of American International Group, Bank of America, Berkshire Hathaway, Citigroup Inc , and JPMorgan Chase & Co. and has the following options: Long Jan 2014 $25 Calls on American International Group. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance

News, Politics, Government

Former World Bank president withdraws from Pennsylvania college commencement

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The former president of the World Bank has withdrawn from a Pennsylvania college’s commencement following critical comments posted on a school newspaper forum.

Robert Zoellick, a 1975 alumnus of Swarthmore College, also declined to receive an honorary degree, according to an announcement by Swarthmore President Rebecca Chopp that was obtained and first reported by the Philadelphia Inquirer.

“I don’t want to disrupt what should be a special day for the graduates, their families, and friends,” Zoellick wrote in an email Chopp distributed on Friday. “Nor do I have an interest in participating in an unnecessarily controversial event.”

Chopp, in the email, praised Zoellick’s “knowledge of the global economy” with a vision of how it can address poverty, social equality and justice.

“He is a model for students who want to combine knowledge with service, ethics with outreach, and wisdom with a commitment to the wider world,” the email, which was obtained by FoxNews.com, continued. “Swarthmore is very proud to claim him as an alumnus and stands by its decision to award him the honorary degree.”

Zoellick, a senior fellow at Harvard University’s Belfer Center for Science and International Affairs, served as the 11th president of the World Bank Group from 2007 to 2012. He has also worked as the executive vice president of Fannie Mae and a senior international adviser to Goldman Sachs.

During a forum hosted by the school’s newspaper, a user who identified themselves as Will L. took issue with Zoellick’s tenure at the three institutions and claimed his role helped “build an ideological foundation” for the Iraq war.

“His whole career has been built on one morally dubious enterprise after another,” the posting read.

In 1998, Zoellick, the newspaper notes, was among the members of the Project for the New American Century — a conservative think tank — who signed a letter urging President Bill Clinton to remove then-Iraqi dictator Saddam Hussein from power because of an assumption that Hussein had weapons of mass destruction. Donald Rumsfeld also signed the letter and would later lead the invasion of Iraq as President George W. Bush’s secretary of defense.

Other students generally defended the choice of Zoellick for June 2 commencement, the Inquirer reports.

Swarthmore College is a private university with roughly 1,500 students about 10 miles southwest of Philadelphia.

Click for more from the Philadelphia Inquirer.

…read more

Source: FULL ARTICLE at Fox US News

Business, Finance, Occupation & Industry

1 Reason to Avoid Annaly Capital Management

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By John Maxfield, The Motley Fool

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Annaly Capital Management is one of the most popular mortgage REITs in the country. It pays a double-digit dividend yield and invests only in mortgage-backed securities that are issued or insured by Fannie Mae or Freddie Mac. The net result is that, aside from interest rate risk, investors in Annaly can have their cake and eat it, too, receiving large quarterly checks in the mail without having to worry about credit risk. What’s not to like?

In the video below, Motley Fool contributor John Maxfield discusses why, despite these things, investors should be wary of this stock.

There’s no question Annaly Capital‘s dividend is eye-catching. But can investors count on that payout sticking around? With the Federal Reserve keeping interest rates at historically low levels, Annaly has had to scramble to defend its bottom line. In The Motley Fool‘s premium research report on Annaly, senior analysts Ilan Moscovitz and Matt Koppenheffer uncover the key challenges the company faces and divulge three reasons investors may consider buying it. Simply click here now to claim your copy today!

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Has JPMorgan Finally Turned a Big Investing Corner?

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By John Grgurich, The Motley Fool

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Potential backlash in the form of lawsuits and fines resulting from the housing boom and subsequent financial crisis have left many bank investors wary to go all-in on their favorite financial institutions, perhaps anxiously waiting for the other shoe to drop.

For JPMorgan Chase investors, at least, that plummeting piece of footwear may have been stopped dead in its tracks by a recent favorable court decision.

Here comes the judge
The Wall Street Journal is reporting that a federal judge has dismissed a major portion of a lawsuit against the superbank, one alleging it knowingly sold bad mortgage-backed securities to the European bank Dexia in the time leading up to the financial crash.

Specifically, the judge threw out that portion of the suit involving 65 mortgage-backed securities issued in 51 offerings, but allowed the suit to continue on five other mortgage-backed securities JPMorgan sold to Dexia. 

Foolish bottom line
This is a big win for JPMorgan. The dismissal of such a large portion of this suit may be a signal that the country’s biggest bank has made it through the worst of its housing-boom related difficulties. How? By possibly setting legal precedent for other housing-boom related suits the bank may be facing.

If JPMorgan can have 65 potential mortgage-backed securities claims so quickly and summarily thrown out of court, investors can be genuinely hopeful the same may happen in other pending cases. Such a decision could also be a shot across the bow for other plaintiffs contemplating similar legal action.

Four-plus years on from the start of the financial crisis, many of the big banks are still in a kind of no-man’s land when it comes to the end game, which leaves investors in a similarly grim place.

Just this past January, Bank of America settled with federal housing giant Fannie Mae for $10 billion over claims relating to the housing boom. Such a massive settlement this far out from the crash rightly frightens potential investors, leaving them to wonder, “Where does it all end?”

Of course, this big win for JPMorgan is no guarantee private lawsuits aren’t going to continue popping up, and there’s nothing saying U.S. District Court Judge Jed Rakoff‘s decision won’t be reversed on appeal (though The Wall Street Journal piece made no mention of that).  

And the superbank is still facing a lawsuit filed in 2012 by New York Attorney General Eric Schneiderman over allegedly fraudulent deals done by Bear Stearns, the fast-failing investment bank JPMorgan scooped up for next to nothing in March of 2008.

Still, investors should be reasonably buoyed by this action. And if Judge Rakoff‘s decision sets a precedent for the rest of the banking sector regarding suits related to mortgage-backed securities, all the better: If the big banks are still too big to fail, and too big to jail per U.S. Attorney General Eric Holder, we might as well let them — and their shareholders — get on with the business …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

CYS Investments, Inc. Announces Conference Call to Discuss First Quarter 2013 Results

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By Business Wirevia The Motley Fool

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CYS Investments, Inc. Announces Conference Call to Discuss First Quarter 2013 Results

NEW YORK–(BUSINESS WIRE)– CYS Investments, Inc. (NYS: CYS) (the “Company”) today announced that it will host a conference call at 9:00 AM Eastern Time on Thursday, April 18, 2013, to discuss its financial results for the quarter ended March 31, 2013.

Hosting the call will be Kevin E. Grant, Chairman and Chief Executive Officer, along with other members of the Company’s senior management team.

To participate in the call by telephone, please dial (888) 895-5479 at least 10 minutes prior to the start time and reference the conference passcode 34628876. International callers should dial (847) 619-6250 and reference the same passcode.

The conference call will also be webcast live over the Internet and can be accessed at the Company’s website at www.cysinv.com. To listen to the live webcast, please visit www.cysinv.com at least 15 minutes prior to the start of the call to register, download, and install necessary audio software.

A dial-in replay of the call will be available on Thursday, April 18, 2013 at approximately 12:00 PM Eastern Time through Thursday, May 2, 2013 at approximately 11:00 AM Eastern Time. To access this replay, please dial (888) 843-7419 and enter the conference ID number 3462 8876#. International callers should dial (630) 652-3042 and enter the same conference ID number. A replay of the conference call will also be archived on the Company’s website at www.cysinv.com.

About CYS Investments, Inc.

CYS Investments, Inc. is a specialty finance company that invests on a leveraged basis in residential mortgage securities for which the principal and interest payments are guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae. The Company refers to these securities as Agency RMBS. CYS Investments, Inc. has elected to be taxed as a real estate investment trust for federal income tax purposes.

CYS Investments, Inc.
Richard E. Cleary, 617-639-0440
Chief Operating Officer

KEYWORDS:   United States  North America  New York

INDUSTRY KEYWORDS:

The article CYS Investments, Inc. Announces Conference Call to Discuss First Quarter 2013 Results originally appeared on Fool.com.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Is the LIBOR Threat Gone for Good?

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By John Grgurich, The Motley Fool

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The Wall Street Journal is reporting that a federal judge has dismissed a swath of claims filed against banks in relation to last year’s LIBOR rate-setting scandal. But while this action clears out much of the bottom-line-robbing danger to banks, some still remains.

Return of the LIBOR
As a refresher, LIBOR stands for London Interbank Offered Rate. It’s one of finance‘s fundamental interest rates and is the starting point for interest rates set in countries around the world, on everything from bonds and home loans to credit cards and derivatives.

Last year, it came to light that this fundamental rate was manipulated during the financial crisis — with banks lowballing their submissions at times, to keep them from being caught up in the deepening panic, while possibly overestimating their submissions at other times, in an alleged attempt to boost profits.

Foolish bottom line
Some banks have already paid fines to U.S. and U.K. regulators over LIBOR rate-manipulation charges. But damages from private suits could potentially have added up to $176 billion, and those are what were — for the most part — dismissed by Judge Naomi Buchwald.  

This is big. $176 billion, even spread out among a great number of banks, could have done real damage.

Bank of America recently settled with Fannie Mae for $10 billion over the sale of bad mortgages, and that left the bank reeling enough. JPMorgan Chase spent most of 2012 dealing with the London Whale derivatives trading scandal, which ultimately cost the superbank more than $6 billion.

While JPMorgan still showed a profit despite the bottom-line hit, even banks as big as it and B of A — perhaps especially B of A — don’t have the resources to absorb the endless billions that LIBOR-related private suits and their resulting awards might have generated.

And while there are still the regulators and their potential fines to worry about, in one sense, that’s a safer bet for the banks than the wild-west that private litigation can be.

For the same reason regulators can’t go all-out in their attempts to punish the big banks for crisis-related behavior, neither can they go all-out in their attempts to punish the big banks for LIBOR-related behavior: the big banks are still too big to fail, so fines have to be calibrated such that they sting but don’t ultimately imperil banks’ solvency.

As The Wall Street Journal noted, there’s always the chance this decision could be reversed on appeal, but for the moment, at least, bank investors should raise a glass of their favorite English ale and toast the fact their favorite banks may have made it through the worst of their LIBOR-related difficulties.

Looking for in-depth analysis on JPMorgan?
Check out a new Motley Fool report on the superbank, written by Ilan Moscovitz, The Motley Fool‘s senior banking analyst and JPMorgan Chase specialist. You’ll learn where the key opportunities for the superbank lie, where its …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Encouraging Signs for America's $3 Trillion Problem

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By Matt Koppenheffer, The Motley Fool

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The StressTest column appears every Thursday on Fool.com. Check back weekly and follow @TMFStressTest on Twitter.

For 2012, Fannie Mae reported a $17 billion profit. The juxtaposition of “profit” and “Fannie Mae” probably seems a bit odd. But that is indeed what Fannie’s books showed for the year.

The swing from a $17 billion 2011 net loss to the $17 billion 2012 profit was driven primarily by the fact that Fannie had a near-$27 billion provision for loan losses in 2011 versus a benefit of close to $1 billion on that line in 2012. Cynicism could creep in, here — just as with banks, loan-loss provisions for Fannie are an estimate calculated by the lender. 

However, the change in provisions does reflect real, observable data. Charge-offs at Fannie were down around 30% in 2012. The Case-Shiller 20-City home-price index was up 7% for 2012. Some cities particularly hard-hit by the crisis fared even better — Phoenix prices jumped 23% during the year. Among all U.S. banks, delinquency rates were 10.1% as of December 2012, down from 10.3% the year before, and 11.3% at the beginning of 2010.

Fannie’s reversal of fortunes also reflects the fact that the proportion of its balance sheet mired in pre-2009 muck is trickling away. In its annual report, the company breaks out its 2005 to 2008 loan book as part of its “legacy book of business” as opposed to its more recent vintage “new single-family book of business.” The comparison of the two books are striking.

Source: Fannie Mae 10-K. Fannie Maes Bluer Skies | Create infographics.

It’s important to note that the newer loans have had less time to season, which means bad loans have had less time to show their true colors. But the statistics are encouraging nonetheless.

Does that mean that everything is now all candy canes and unicorns for Fannie Mae? Well, no, of course it doesn’t. For one thing, Fannie’s bloated balance sheet is north of $3 trillion. For sake of comparison, Bank of America  has a $2.2 trillion balance sheet, while Citigroup  has $1.9 trillion in assets.

But it’s not just the size that’s at issue here. That Fannie reported a profit for 2012 and has had better loan-performance experience since 2009 is akin to the obese person who’s lost 50 pounds or the alcoholic that’s been dry for six months. Directionally, Fannie, the overweight person, and the alcoholic are all doing better, but that doesn’t mean that the sins from the past can’t be repeated. And if there’s only change of the “kinda, sorta” variety, the temptation to repeat past mistakes may be more of a question of “when” rather than “if.”

In the grand tradition of “out of sight, out of mind,” Fannie gets far less attention now as compared to the likes of B of A and Citi. But if we looking back to 2006, Fannie’s balance sheet leverage — not including giant trusts that have …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

17 Billion Reasons Fannie Mae Is Looking Up

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By Matt Koppenheffer and David Hanson, The Motley Fool

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Yesterday, Fannie Mae announced a $17 billion profit for 2012, a complete turnaround from its near $17 billion loss in 2011. Where did Fannie’s newfound profitability come from, and what does it mean for the housing and mortgage markets?

In the following video, Motley Fool financial analysts Matt Koppenheffer and David Hanson tell investors what this complete change of direction means to them, and what they may be buying because of it. 

Bank of America’s stock doubled in 2012. Could this news on the housing market mean that more is yet to come? With significant challenges still ahead, it’s critical to have a solid understanding of this megabank before adding it to your portfolio. In The Motley Fool‘s premium research report on B of A, analysts Anand Chokkavelu, CFA, and Matt Koppenheffer, Financials bureau chief, lift the veil on the bank’s operations, including detailing three reasons to buy and three reasons to sell. Click here now to claim your copy.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Apple Booted by Goldman, Fannie Mae's Record Profit, and Other Financial Stories

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By John Maxfield, The Motley Fool

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There’s never an absence of news impacting financial stocks, but weeding through all of it can be a chore in and of itself. To that end, here are five of today’s biggest finance-related stories.

1. Fannie Mae’s record profit
In September of 2008, the U.S. government had to step in and seize the then-ostensibly private mortgage giants Fannie Mae and Freddie Mac. The plan at the time was to prevent their failure, stabilize the mortgage market, and to then gradually wind the entities down. As The Wall Street Journal noted at the time, “[Treasury Secretary Henry] Paulson’s weekend announcement represented one of the most sweeping interventions in financial markets since the Depression, essentially putting the government in charge of helping finance American mortgages.”

The question of what to do with at least Fannie Mae became slightly more complicated today, after the now-government controlled entity reported its largest annual net income in its history — click here to see the press release. For the fiscal year 2012, it earned $17.2 billion — $7.6 billion of which came in the fourth quarter alone. “Solid business fundamentals such as improving performance of our book of business and improvements in the housing market led us to report the largest annual and quarterly net income in the company’s history,” said Susan McFarland, executive vice president and chief financial officer. “We expect to remain profitable for the foreseeable future and return significant value to taxpayers.”

2. Bank of America exercises its Fed-given rights
That didn’t take long. Less than three weeks ago, the nation’s largest banks learned whether or not they’d be allowed to return more capital to shareholders following the Federal Reserve‘s comprehensive capital analysis and review. For its part, as I discussed here, Bank of America got the go ahead to repurchase $5 billion in common stock and $5.5 billion in preferred shares. And as promised, it notified investors yesterday in this press release that it had submitted redemption notices for the latter. The move contributes to B of A’s efforts to simplify and boost its capital base in the face of the Basel III requirements.

3. Former SEC chief goes through revolving door
The line between Washington and Wall Street became a little less distinct today, after the former chairwoman of the Securities and Exchange Commission, Mary Schapiro, announced that she will be joining the consulting firm Promontory Financial Group, which has “built a reputation as a shadow regulator by hiring scores of former government officials,” according to The Wall Street Journal.

To say that Shapiro is a prime catch for lobbying firm is an understatement. She’s spent “28 of the last 32 years as a regulator” and is the only person to have led all three of Wall Street‘s biggest regulators: the SEC, the CFTC, and FINRA. But don’t get the wrong idea, “In …read more
Source: FULL ARTICLE at DailyFinance

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7 Things You Need to Know About Wells Fargo

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By John Grgurich, The Motley Fool

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With more than $1.4 trillion in assets, I wouldn’t exactly call Wells Fargo an under-the-radar bank, but it typically doesn’t make the headlines the way its big-bank peers do. That’s a good thing.

If you can be the fourth-largest bank in the U.S., be the top holding in Warren Buffet’s Berkshire Hathaway, and still remain as low-drama as Wells can, in my book, that means you’re running a big bank the way a big bank is supposed to be run. Bank of America and Citigroup CEOs, take note.

Without further ado, then, here are some of my favorite things about Wells: seven easy metrics, benchmarks, and points of view that will help you get your head around this gentle — but high performing — banking giant:

1. Outstanding 2012 share-price performance
Many of the country’s big banks did well in 2012, but that shouldn’t take anything away from Wells’ outstanding performance — it returned 20.23% to shareholders from January 3 to December 31 of last year.

JPMorgan Chase shareholders saw a net gain of 25.70% in the price of their shares over the course of 2012, but they had to live through the agony of the London Whale in the process. There was no similar drama for Wells stockholders.

2. Solid year-to-date share-price performance
Wells shareholders have made a handsome 5.53% on their positions this year. Shareholders in investor darling B of A have only seen a return of 1.25% so far.

But perhaps best of all, Wells shareholders didn’t have to endure a $10 billion-plus Fannie Mae settlement for housing-boom misdeeds in the process.

3. Great fourth-quarter performance
For the fourth quarter of last year, Wells grew its revenue by 8.10% year over year and its net income by 23.90%. Kudos to the higher-drama Citi on this metric, though; it grew its income by 25.10% for Q4 on just 5.00% revenue growth for the same period.

4. Fabulous stress-test results
On the Federal Reserve‘s 2013 stress tests, Wells had an actual Tier 1 common ratio of 9.9% and a stressed minimum of 7%, well above the Fed’s 5% requirement. This cool-under-pressure performance allowed the bank to raise its dividend by 20%.  

5. Fabulous return on equity
Return on equity, or ROE, is a favorite metric for bank analysts. Wells has an ROE of 12.89%, easily topping Citi’s 4.27%, and blowing B of A’s 1.79% out of the water. Wells even beats the ever-boastful JPMorgan on this metric, with its ROE of 10.98%.

6. #1 in U.S. home loans
In case you hadn’t heard, let me be the first to inform you that the U.S. housing market is rebounding, thanks in no small part to the Fed’s third round of quantitative easing: which is aimed specifically at boosting the housing sector.

The good news for Wells investors is, the superbank is the No. 1 home lender in the country. And as Wells kept its nose very clean …read more
Source: FULL ARTICLE at DailyFinance

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Anworth Declares a $0.15 Per Share First Quarter 2013 Common Dividend

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By Business Wirevia The Motley Fool

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Anworth Declares a $0.15 Per Share First Quarter 2013 Common Dividend

SANTA MONICA, Calif.–(BUSINESS WIRE)– Anworth Mortgage Asset Corporation (NYS: ANH) announced today that its Board of Directors declared a quarterly common stock dividend of $0.15 per share for the first quarter of 2013. The common stock dividend is payable on April 29, 2013 to common stockholders of record as of the close of business on April 8, 2013.

About Anworth Mortgage Asset Corporation

Anworth is an externally-managed mortgage real estate investment trust. We invest primarily in securities guaranteed by the U.S. Government, such as Ginnie Mae, or guaranteed by federally sponsored enterprises, such as Fannie Mae or Freddie Mac. We seek to generate income for distribution to our shareholders primarily based on the difference between the yield on our mortgage assets and the cost of our borrowings. We are managed by Anworth Management, LLC, or the Manager, pursuant a management agreement. The Manager is subject to the supervision and direction of our Board of Directors and is responsible for (i) the selection, purchase and sale of our investment portfolio; (ii) our financing and hedging activities; and (iii) providing us with management services and other services and activities relating to our assets and operations as may be appropriate. Our common stock is traded on the New York Stock Exchange under the symbol “ANH.”

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

This news release may contain forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based upon our current expectations and speak only as of the date hereof. Forward-looking statements, which are based on various assumptions (some of which are beyond our control) may be identified by reference to a future period or periods or by the use of forward-looking terminology, such as “may,” “will,” “believe,” “expect,” “anticipate,” “assume,” “estimate,” “intend,” “continue,” or other similar terms or variations on those terms or the negative of those terms. Our actual results may differ materially and adversely from those expressed in any forward-looking statements as a result of various factors and uncertainties, including but not limited to, changes in interest rates; changes in the market value of our mortgage-backed securities; changes in the yield curve; the availability of mortgage-backed securities for purchase; increases in the prepayment rates …read more
Source: FULL ARTICLE at DailyFinance

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Why Citigroup Is Down Over the Last 5 Days

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By John Grgurich, The Motley Fool

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While the markets are all in the green for the last five days, the big banks are decidedly in the red, including our hero, Citigroup : down an unhappy 2.17%.

The market is still digesting a bit of bad news for Citi, but that doesn’t explain the sector being down as a whole. So, what gives?

Tale of the tickers
Before we take a crack at answering that, here’s a quick overview of where Citi’s peers and the markets are shaking out for the last five days:

  • Bank of America is down 3.56%.
  • JPMorgan Chase is down 2.29%.
  • Wells Fargo is our best performer here, down only 0.79%.

The market is doing better, if not exactly going gangbusters, with the narrower Dow Jones Industrial Average up 0.61%, the broader S&P 500 up 0.94%, and the Nasdaq up 0.74%.

Bad news comes in twos
The bad news for Citi I referenced earlier is twofold. First, just last week, the superbank announced it was settling a $730 million investor lawsuit for “misstatements and omissions in the company’s disclosures” for shares purchased between May 11, 2006 and November 28, 2008. 

The second item is an “enforcement action” taken against Citi by the Federal Reserve for “breakdowns in money-laundering controls.” In particular, the enforcement action has to do with Citi and one of its subsidiaries, the Mexico-based Banamex. The Fed cited a “failure to monitor cash transactions for potentially suspicious activity.”  

According to The New York Times, no fines were levied, and neither Citigroup nor Banamex admitted to any wrongdoing. 

Foolish bottom line
As regards the investor lawsuit, this is more financial-crisis baggage. And while $730 million is in no way a threat to the superbank’s operations, it still brings back unpleasant memories and leaves investors wondering what’s left to come.

B of A recently agreed to pay Fannie Mae $10 billion for bad mortgages it sold to the housing giant during the real-estate boom. Citi’s home-loan transgressions never reached B of A’s staggering proportions, but they were staggering enough to warrant the creation of a “bad bank” to hold said toxic mortgage debt.

As for the money-laundering action, at least no fines were levied, but this is another kind of thing that investors get tired of hearing about: sloppy controls at best, or outright bad behavior at worst. So it’s possible the market is still just digesting these two Citi news items, potentially explaining its poor performance over the last five days.

But all of the banks are doing poorly. What explains that? How about stress-test hangover?

The Fed’s 2013 Comprehensive Capital Analysis and Review was a highly anticipated event for all bank investors. It could be that those weeks of waiting for the initial results, and then the results that would reveal whether each bank could proceed with its proposed capital actions, left investors and the markets exhausted.

Of course, the dismal performance of Citi and its peers could just be due to the capricious, invisible hand of the market …read more
Source: FULL ARTICLE at DailyFinance

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3 Reasons to Sell Annaly Capital

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By Amanda Alix, The Motley Fool

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Times are still tough for agency mortgage REITs such as Annaly Capital , but a healing economy, rising mortgage rates, and whispers regarding an eventual end to the Federal Reserve‘s quantitative easing program have spurred investors to send Annaly’s stock higher over the past week or so.

Is it time to buy in? There are a few headwinds here, some that are part and parcel of investing primarily in agency paper, and at least one that is of Annaly’s own making. Here are three issues that investors considering a stake in Annaly should take under advisement — and might very well cause current investors to think about selling.

Management shakeup seems dicey
This spring, Annaly management will ask its shareholders to vote on a new management setup, which will change the current method of management by insiders to one that is carried out by an external company. As management points out, this is not uncommon in the mREIT universe. However, there are a couple of things that stockholders should be aware of that make this idea look less enticing for investors.

One confusing aspect is the makeup of the new management entity — which will consist of Annaly’s current management. This seems a bit strange, to say the least, and here’s another thorny issue: Analysts note that, if the change goes through, management’s pay will no longer be disclosed. In the current climate of increased calls for transparency and stockholder say-on-pay, this aspect looks very fishy.

Dwindling dividends and a shrinking spread
Annaly is well known for paying out excellent dividends, but that hasn’t been the case for some time. Over the past two years, Annaly’s dividend has been on a downward spiral, with the most current quarterly payout sitting at $0.45. Compared to other agency players, like American Capital Agency , which has paid out its juicy $1.25 dividend for the past five quarters, and Capstead Mortgage which actually raised its payout by one penny for the first quarter of this year, Annaly looks like it is losing ground.

In addition, its spread — the source of most of its income — has shrunk to a measly 0.95%. Compare this to American Capital Agency’s 1.63% and Capstead’s 1.13%, and you can see why Annaly’s dividend is looking somewhat anemic.

The exit of Fannie and Freddie could hurt Annaly
An especially problematic issue is that of the government‘s winding down of government-sponsored entities Fannie Mae and Freddie Mac. Of course, the exit of the two GSEs that currently back the lion’s share of mortgage-backed securities might put all agency mREITs in peril. But Annaly, as the largest of all these players, would probably suffer the most, as investor concerns regarding the winding-down process impact the value of its current holdings — and, very possibly — make finding new investments with an acceptable risk level more difficult.

Should these issues cause investors to run from Annaly? …read more
Source: FULL ARTICLE at DailyFinance

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Can Anyone Price Mortgage Risk Properly?

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By Richard Green Gretchen Morgenson complains that Fannie Mae and Freddie Mac did a lousy job of pricing mortgage risk. She consequently argues that any successor entity that looks remotely like them, such as the mortgage utility proposed by the Bipartisan Policy Center, will inevitably leave taxpayers on the hook. Given that part of Ms. Morgenson’s problem with the BPC is that it has members who worked for Fannie and Freddie, before I move on I should disclose that I worked for Freddie for about 16 months in 2002-2003. I am not sure when the statute of limitations on such things expires. I also am credited for doing some work for BPC, but that work actually had nothing to do with the future of mortgage securitization. …read more
Source: FULL ARTICLE at Forbes Markets