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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (27550)	8/1/2007 6:25:11 PM
From: Broken_Clock	Respond to of 78702

I don't know about FRE but Fannie is chock full of mortgage trash. There is an OFHEO report on the yahoo FNM message thread back a couple of weeks. FNM is the ultimate repository of trash. Since they don't publish financials there is little worry that bad news will ever leak out. -g- That said FNM bounced off the 200 day MA today on the reversal so I concur that long FNM/FRE is a safe bet for now. If they ever do release updated financials I imagine there would be a bloodbath in FNM. Don't really follow Freddie much.

To: Paul Senior who wrote (27550)	8/1/2007 6:28:14 PM
From: E_K_S	Read Replies (2) \| Respond to of 78702

Hi Paul - That's a good theme on FRE and if it develops as you describe, they should grow their market share. It's possible that if they eventually decide to offer a slightly riskier loan product (ie the new Prime Minus), they would be the best institution to dictate the guidelines and manage the risk. The Federal Government might even help in providing a segment of these loans with guarantees if an industry restructuring is necessary. It would all benefit FRE and it's future growth. The current sub-prime market developed w/o strick underwriting guidelines. Many of the companies that are getting hurt now provided their own products that never were tested through a complete real estate cycle. These non-standard sub-prime loans were packaged and sold in the third market w/o much transparency to the buyer. Now they come home to roost. The Fannie Mae and Freddie Mac underwriting guidelines are the gold standard in the industry. They underwrite billions of dollars worth of loans that follow very strick underwriting guidelines. The buyer of these loans knows exactly what there getting and the historical risk profile associated with the loan type. I wonder where most of the future hurt will come from (the customer, other banks, brokerage industry) if more of the business is consolidated by FRE? On another footnote, I guess I am beginning to like NYB more as this sub-prime scare is working itself out. NYB's loan niche is multi family construction financing that generates high fees at high rates with loans that turn over frequently. If the bulk of the future sub-prime loans either go away or are consolidated into an organization like FRE, NYB's product portfolio now becomes more profitable (at least until new competition arrives). It's certainly something that will take years to change. Many of these sub-prime banks will have to downsize their business, leave the market or be bought out at a steep discount. The smart investors will look to the new opportunities that occur when fear hits the street. I think you may be on to something with FRE. EKS

To: Paul Senior who wrote (27550)	8/11/2007 6:17:37 PM
From: Spekulatius	Respond to of 78702

re FRE I wonder if the real winner could be capital strong Banks that can afford to keep loans on their book. While you can still get a FNM/FRE loan for up to 417K for 6.7% (30 year) you have to pay 7.6% if you go beyond that amount. So i think FNM?FRE is underpricing risk while the interest rates for the JUMBO ought to be attractive. I think the borrowers who qualify today are fairly good risks. This bank that sells jumbos need to keep the mortgages on their own book for a while but i bet in a few month they can offload again at a nice spread.

To: Paul Senior who wrote (27550)	10/18/2007 4:39:10 PM
From: Paul Senior	Read Replies (3) \| Respond to of 78702

I've taken just a very few more shares of FRE as it hits a new 12-mo. low. Not a good day for real estate or bank related. Wamu (WM)'s quarter not good at all. Prospects? Who knows. My local WAMU office always seems to have customers in it making transactions ---whatever that means. Wamu has had a history of raising dividends every year. Maybe that's come to an end. Still...if dividend just holds up, that's a 7.3% yield now -- enough to attract me. I have a stub WM position. Am considering adding; not sure what I will do now. finance.yahoo.com