Daily Archives: February 17, 2014

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New Report Reveals That 3 Million Homeowners Have Benefited from HARP

New Report Reveals That 3 Million Homeowners Have Benefited from HARP

(Source: FHFA) – The Federal Housing Finance Agency (FHFA) announced today that the Home Affordable Refinance Program (HARP) has reached a significant milestone: more than 3 million homeowners have now refinanced their mortgages through the program. This noteworthy achievement is detailed in FHFA’s November Refinance Report.“Three million HARP refinances is an important accomplishment and represents real help to families and communities still struggling as a result of the mortgage crisis,” said FHFA Director Mel Watt. “We are continuing our efforts to make sure that those who can take advantage of this program have the information they need to do so.”

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The Untouchable Profits of Fannie Mae and Freddie Mac

The Untouchable Profits of Fannie Mae and Freddie Mac

Would you buy stock in a company that barred you from sharing in its future earnings? Of course not. Participating in the upside is what stock ownership is all about.

And yet, as of December 2010, holders of Fannie Mae and Freddie Maccommon stock were subject to such a restriction by the United States government. They didn’t know it at the time, though, because the policy was not disclosed.

This month, an internal United States Treasury memo that outlined this restriction came up at a forum in Washington.

The memo was addressed to Timothy F. Geithner, then the Treasury secretary, from Jeffrey A. Goldstein, then the under secretary for domestic finance. In discussing Fannie and Freddie, the beleaguered government-sponsored enterprises rescued by taxpayers in September 2008, the memo referred to “the administration’s commitment to ensure existing common equity holders will not have access to any positive earnings from the G.S.E.’s in the future.”

The memo, which was produced in a lawsuit filed by Fannie and Freddie shareholders, was dated Dec. 20, 2010. Securities laws require material information — that is, information that might affect an investor’s view of a company — to be disclosed. That the government would deny a company’s shareholders all its profits certainly seems material, but the existence of this policy cannot be found in the financial filings of Fannie Mae. Neither have the Treasury’s discussions about the future of the two finance giants mentioned the administration’s commitment to shut common stockholders out of future earnings. Freddie Mac’s filings do refer, albeit incompletely, to the administration’s stance, noting that the Treasury “has indicated that it remains committed to protecting taxpayers and ensuring that our future positive earnings are returned to taxpayers as compensation for their investment.” Note that this reference does not say all earnings.

Lewis D. Lowenfels, a securities law expert in New York, found this statement insufficient. “If there is disclosure regarding future Fannie and Freddie earnings and the administration has a commitment that existing Fannie and Freddie common equity holders will never receive any future positive earnings,” he said, “this commitment would be material to investors and should be disclosed.”