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mgraham224
1008 Posts |
 Posted - 09/07/2008 : 10:47:50 AM
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Handy Q and A for you:
http://www.ofheo.gov/media/pdf/FHFACONSERVQA.pdf
And following Lockhart's statement which can be found here: http://www.ofheo.gov/newsroom.aspx?ID=456&q1=1&q2=None
there is certainly a way that the markets could read MBS positive data into the implicit sub-text. Perhaps a more important consideration is "how much of the tightening we'd expect to see follow a statement like this has already occurred in the form of speculation?"
If cap markets buy Lockhart's verbiage hook line and sinker, we could see dramatic tightening. If they remain unconvinced until the "pudding" has been served, it could go wider in the short term.
I suppose we'll all know bright and early tomorrow what the initial sentiment is. |
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ritabradley01
3158 Posts |
Posted - 09/07/2008 : 11:30:01 AM
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So Matt when someone says the government has "seized" Fannie/Freddie, is that an accurate statement?
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mgraham224
1008 Posts |
Posted - 09/07/2008 : 12:03:16 PM
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it's a sensationalistic word to use i think. imo, there's a big visceral difference between "seized" and "placed into conservatorship." Yeah, they've "seized" 'em just like a mortgage broker with employees would "seize their employees pipelines" by making mandatory compliance standards. Their not really taking those loans and doing their own thing with them, but rather forcing the loan officers to work within a framework chosen and overseen by the manager. But "seized" generates more web hits I'd guess.
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financeone
1635 Posts |
Posted - 09/07/2008 : 12:09:45 PM
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Could the Teasury being able or directed to purcahse MBS's help us out? Historically it has, but I haven't digested all the statements yet. (probably won't)
Blurb from Lockhart:
"Finally, to further support the availability of mortgage financing for millions of Americans, Treasury is initiating a temporary program to purchase GSE MBS. During this ongoing housing correction, the GSE portfolios have been constrained, both by their own capital situation and by regulatory efforts to address systemic risk. As the GSEs have grappled with their difficulties, we've seen mortgage rate spreads to Treasuries widen, making mortgages less affordable for homebuyers. While the GSEs are expected to moderately increase the size of their portfolios over the next 15 months through prudent mortgage purchases, complementary government efforts can aid mortgage affordability. Treasury will begin this new program later this month, investing in new GSE MBS. Additional purchases will be made as deemed appropriate. Given that Treasury can hold these securities to maturity, the spreads between Treasury issuances and GSE MBS indicate that there is no reason to expect taxpayer losses from this program, and, in fact, it could produce gains. This program will also expire with the Treasury's temporary authorities in December 2009." |
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mgraham224
1008 Posts |
Posted - 09/07/2008 : 1:01:09 PM
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theoretically yes, and certainly if things "pan out" with that aspect of it in the medium to long term.
to a certain extent the markets priced that in already, so there could potentially still be a lot of choppy trading as market participants gradually synthesize their assumptions of future implications.
for sure it is intended to bring the cost of lending down, so at the very least,this particular component should not hurt unless the action taken this weekend was less supportive than that which the markets had already assumed.
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financeone
1635 Posts |
Posted - 09/07/2008 : 1:25:07 PM
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