navycmdr
2 hours ago
Mortgage Giants Fannie Mae and Freddie Mac Brace for Job Cuts
William Pulte, the new director of the Federal Housing Finance Agency, is consolidating control over Fannie Mae and Freddie Mac and questioning employees’ productivity.
William Pulte, the new director of the Federal Housing Finance Agency, ousted 14 board members at Fannie Mae and Freddie Mac and named himself chairman of both companies’ boards.
By Matthew Goldstein - March 18, 2025
The newly appointed head of one of the nation’s top housing regulators tightened his grip on the agency with a major board shake-up on Monday at two government-controlled mortgage finance firms.
William Pulte, the director of the Federal Housing Finance Agency, ousted 14 board members at Fannie Mae and Freddie Mac and named himself chairman of both companies’ boards.
The last two F.H.F.A directors did not sit on the boards of Fannie and Freddie, the two firms that help drive the nation’s $12 trillion mortgage market. The F.H.F.A. is the primary regulator for Fannie and Freddie, which have been under federal government control since the 2008 financial crisis.
Some see the board shake-ups as a move by Mr. Pulte to quiet potential dissent to any future job cuts at Fannie and Freddie, which in total employ about 15,000 people, or changes in housing policy.
“You want to get rid of people on the board who might make noise,” said Christopher Whalen, chairman of Whalen Global Advisors, which specializes in analyzing and consulting on financial institutions. “The people who are left, they trust.”
One of the new directors Mr. Pulte named to the Fannie board is Christopher Stanley, an executive at Elon Musk’s SpaceX who is working with Mr. Musk and his group, the Department of Government Efficiency, in efforts to downsize the federal work force. Mr. Stanley did not respond to a request for comment.
“Sure feels like they are laying the groundwork for a DOGE-like intervention,” said Jim Parrott, a mortgage finance expert and a nonresident fellow at the Urban Institute, a Washington think tank.
An F.H.F.A. spokesperson did not respond to a request for comment.
Mr. Pulte is a grandson of William Pulte, who died in 2018 and was the founder of PulteGroup, one of country’s largest home builders.
A day after being sworn in as director of the housing agency on Friday, Mr. Pulte posted on X, “Make Mortgages Great Again.”
He also appeared on a Fox News program to highlight empty offices at Fannie and Freddie, claiming it showed that many employees at the two companies had not returned to the office for work. Mr. Pulte reposted a video link to the segment on X.
His appearance on Fox has set off concern about mass firings at the firms, said one Fannie employee who requested anonymity for fear of reprisal.
Fannie and Freddie do not actually make any home loans. Rather, they buy mortgages from banks and package them into securities that are sold to big investors. In creating those mortgage-backed securities, Fannie and Freddie guarantee them for bond investors, which include pensions, insurers, hedge funds and even the Federal Reserve.
In buying mortgages and bundling them into bonds, Fannie and Freddie free up capital for the banks, which enables them to write more mortgages. And that, in theory, helps keep rates on a 30-year mortgage in check.
In fall 2008, at the start of the financial crisis, the federal government was forced to bail out Fannie and Freddie as bond investors worried about the two companies’ abilities to keep insuring mortgages against the risk of default. The companies technically were taken over by the Treasury Department and the F.H.F.A., which was created to serve as Fannie and Freddie’s regulator.
Some investors and officials are pushing the Trump administration to release Fannie and Freddie from government control and restore their independence as publicly traded companies. Both Mr. Pulte and Treasury Secretary Scott Bessent have said they favor ending the government conservatorship, but they have also said they would not rush into any decision that might push up mortgage rates
The current rate on a 30-year mortgage, the most popular home loan in the United States, is around 6.7 percent.
navycmdr
5 hours ago
$Boom !
https://www.govexec.com/workforce/2025/03/housing-agencies-begin-closing-offices-escorting-employees-out/403903/
The Federal Housing Finance Agency, which oversees The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, the federally backed mortgage institutions, has so far this week shuttered two of its divisions, resulting in a cut to nearly 10% of its workforce. The moves follow the confirmation of Bill Pulte to lead FHFA and his decision this week to fire the majority of both Fannie Mae and Freddie Mac’s boards and name himself as the chair of both panels. and Freddie Mac, the federally backed mortgage institutions, has so far this week shuttered two of its divisions, resulting in a cut to nearly 10% of its workforce. The moves follow the confirmation of Bill Pulte to lead FHFA and his decision this week to fire the majority of both Fannie Mae and Freddie Mac’s boards and name himself as the chair of both panels.
TightCoil
5 hours ago
Go Fannie Mae - All The Way
Recap of our PPS since Mar 7 which was Day 39 of over $5 when we were at $5.84. Then the next trading Day (Mar 10)) we went BELOW $5 to $4.91, but rebounded swimmingly the next Day (Mar 11) to $5.19 and hit $6.11 on Mar 14...
Mar 19 - $6.03 - 8,071,667 today
Mar 18 - 5.65 - 10,339,547
Mar 17 5.82 - 9,309,100
Mar 14 6.11 - 16,518,200
Mar 13 5.50 - 5,951,400
Mar 12 5.65 - 9,589,600
Mar 11 5.19 - 10,480,900
Mar 10 4.91 - 16,783,700
Mar 7 5.84 - 23,007,600
navycmdr
6 hours ago
Booooom ! Breaking news !
Housing agencies begin closing offices, escorting employees out
HUD and FHFA are shutting down some functions, with more cuts expected soon and power consolidation already underway.
Eric Katz - March 19, 2025
Two key agencies overseeing the nation’s housing policy have begun to eliminate offices and shed staff, according to several employees briefed on the matters, as the Trump administration ratchets up its plan to slash federal government capacity.
The Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, the federally backed mortgage institutions, has so far this week shuttered two of its divisions, resulting in a cut to nearly 10% of its workforce. The moves follow the confirmation of Bill Pulte to lead FHFA and his decision this week to fire the majority of both Fannie Mae and Freddie Mac’s boards and name himself as the chair of both panels.
The Housing and Urban Development Department, which operates separately from FHFA, is in the process of shuttering its Office of Field Policy and Management. It has notified the American Federation of Government Employees council that represents those workers that it plans to initiate reductions in force for around 150 employees. AFGE has demanded to bargain over the RIFs but has yet to hear back from the department.
Story Continues Below Sponsor Message
OFPM housed offices such as those overseeing labor standards, fair housing and lead hazard control. The department is expected to go through more significant layoffs in the coming weeks and months. Several HUD employees told Government Executive they were on high alert amid expectations that mass RIFs would begin soon, but those actions have not yet been announced. HUD, like all agencies, turned in its plan for across-the-board headcount reduction last week.
HUD and FHFA have the same liaisons from the White House’s Department of Government Efficiency, including at least Michael Mirski, whose firm TCC Management operates mobile home parks. Scott Langmack, an executive at real estate data firm Kukun, also represents DOGE at HUD.
FHFA on Wednesday brought some of the roughly 60 employees from its Research and Statistics Division into the agency cafeteria and notified them of their placement onto administrative leave. The workers were subsequently escorted out of the building.
That followed FHFA on Tuesday dissolving its Division of Public Interest Examination, which is expected to lead to some of the office’s two dozen or so employees losing their jobs. Some of the roles are protected by statute and are expected to be placed elsewhere, employees said. DPIE was a new office that FHFA stood up last year to to provide oversight of entities it regulates in areas such as affordable housing, consumer protection and diversity and inclusion. Its closure follows the elimination of the agency’s Office of Minority and Women Inclusion. Because OMWI is statutorily required, it was folded in the agency’s equal employment opportunity office, though its employees were placed on leave. On Tuesday, FHFA placed the EEO team on leave as well, according to two employees.
The agency has also placed some of its facilities staff on leave, a move an employee briefed on the situation could not explain.
An FHFA spokesperson declined to elaborate on why any specific cuts were taking place, saying only that it was “streamlining our agency” and would “follow all applicable laws, including OMWI and EEO statutes.”
FHFA has 866 employees total, though only 744 when not including its inspector general’s office. The recent administrative leave placements, which are expected to lead to layoffs, amount to the agency shedding about 10% of its workforce in the last 24 hours. An additional 60 employees have accepted the Trump administration’s deferred resignation offer.
Story Continues Below Sponsor Message
One employee called the staffing cuts, coupled with the Freddie Mac and Fannie Mae board purges, a “shock” that creates “lots of uncertainty” about FHFA’s future. The two “government-sponsored enterprises” went into a conservatorship led by FHFA after the 2008 housing crisis, but are expected to be offloaded under President Trump.
The recent moves do not look like ‘preparing for a traditional [initial public offering] where you want credibility,” one employee said.
In a recent video message, HUD Secretary Scott Turner sought to push back on media narratives about cuts at his department, while declining to say anything specific that has been misreported.
“HUD is taking inventory of every program and process to determine when and where the department can be more efficient in the delivery of its statutorily required programs,” Turner said. He added he department was “laser focused” on eliminating waste, fraud and abuse but also was also “taking a surgical approach and making sure we retain top talent and institutional knowledge so that we can best serve the American people.”
HUD did not respond to requests for comment.
Rodney5
7 hours ago
If our friend Guido was appointed FHFA Director he would apply Federal Statutes, the Director doesn’t take marching orders from the Treasury.
bobstruths: Quote: “ ``(b) Limitations.--The Board (of which one member is Treasury) may not exercise any executive authority, and the Director may not delegate to the Board any of the functions, powers, or duties of the Director.” End of Quote (plain as day)…
Former FHFA Director Calabria also knows this too Quote: “Congress consciously chose to vest with FHFA, not Treasury, the sole authority over invoking and conducting a conservator or receivership. The role of Treasury is exclusively that of a creditor” End of Quote...
The FHFA Director does not take marching orders from the Treasury Secretary.
'The Conservatorships of Fannie Mae and Freddie Mac: Actions Violate HERA and Established Insolvency Principles:' By Michael Krimminger and Mark Calabria
Link to Calabria writing; https://www.cato.org/sites/cato.org/files/pubs/pdf/working-paper-26_1.pdf
It’s bad faith and unfair dealing when the Regulator is authorized to pay down the Senior Preferred Stock and sent the Net Worth without the pay down option. The FHFA Director doesn’t need the Treasury approval to pay down the Senior Preferred Stock the Director has the authority from Congress written in HERA:
HOUSING AND ECONOMIC RECOVERY ACT OF 2008
RESTRICTION ON CAPITAL DISTRIBUTIONS.— page 2731
‘‘(1) IN GENERAL.—A regulated entity shall make no capital distribution if, after making the distribution, the regulated entity would be undercapitalized. The exception.
Quote: “Page 2732
EXCEPTION.—Notwithstanding paragraph (1), the Director may permit a regulated entity, to the extent appropriate or applicable, to repurchase, redeem, retire, or otherwise acquire shares or ownership interests if the repurchase, redemption, retirement, or other acquisition— ‘‘(A) is made in connection with the issuance of additional shares or obligations of the regulated entity in at least an equivalent amount; and ‘‘(B) will reduce the financial obligations of the regulated entity or otherwise improve the financial condition of the entity.’’.
NOTE: REPURCHASE, REDEEM, RETIRE...
WILL REDUCE THE FINANCIAL OBLIGATIONS OF THE REGULATED ENTITY.
Link: https://www.congress.gov/110/plaws/publ289/PLAW-110publ289.pdf
In essence allows the trustees of Fannie and Freddie to go to the market at any time to raise new capital, including new capital with lower dividend coupons, to buy back the Treasury’s senior preferred. Any loyal conservator of Fannie and Freddie would take advantage of this refinancing option to end the bailout arrangement, by paying off the senior preferred in full. The Treasury did not take a Perpetual Equity Investment in the enterprises, the Treasury stated a temporary investment period!
kthomp19
8 hours ago
I don't know that keeping the actual exercised shares in the SWF makes sense, just to provide that implicit guarantee. If the stress tests show just how incredibly strong the GSEs are, we don't need a mechanism for a government backstop.
The SWF buying FnF MBS, as opposed to just holding Treasury's common shares, would both reduce mortgage spreads and strengthen the implied guarantee. Treasury could load its commons into the SWF at first, and gradually sell them off and use the proceeds to buy MBS.
I think they'd be better off to use the 79.9% warrants (or substantially less), to generate $100-200B in cash to put into Gold or ETFs or Index funds so that they do not have controlling interest in any particular company.
(or substantially more 😉)
The controlling interest part isn't a problem. Treasury owned 92% of AIG common and never had an issue with that. From page 12 (page 131 of the pdf) of the AIG master transaction agreement:
Section 3.09. Voting of Warrant Shares. Notwithstanding anything in this Amended
SPA to the contrary, the Investor shall not exercise any voting rights with respect to the Warrant
Shares.
"Investor" is Treasury (page 1). Including a similar clause in whatever FnF master agreement happens would be trivial, even if Treasury converts the seniors.
kthomp19
8 hours ago
I can give you an example of Preferred getting screwed relative to Common from my personal experience, if you care to hear it. Cedar Realty Trust(CDR) which got bought by Wheeler Realty (WHLR).
Thanks for the example. I didn't know about this one.
After liquidating the common, there was not enough residual value to liquidate the preferred. They essentially just skipped over them to pay common off. So the Preferred did not get redeemed, and instead just went under control of the acquiring company.
Was CDR totally liquidated, as in all of its assets were sold and creditors paid off? Or did its balance sheet just get consolidated onto WHLR's?
Now before you get too excited, I'm not saying this is relevant to the GSEs or that common will get paid off and the Preferred stuck with some GSE newco. I'm just saying there are examples of Preferred getting hosed relative to common, and lawsuits and attempted injunctions did not help.
I would need a bit more detail (like answers to my two prior questions) before knowing how applicable this example would be to FnF.
kthomp19
8 hours ago
I've said before - it's just easier to type "breach" than "breach of the implied covenant of good faith and fair dealing". You may want me to type it out every time.
"Breach of implied covenant" is fine because it's not ambiguous. Merely saying "breach" is, which is the problem.
If a "reasonable shareholder" expected to get nothing ever simply because the NWS was signed, why on earth would they have brought a lawsuit?
How do you still not get this? A "reasonable shareholder" who bought their shares AFTER the NWS has no expectations for any economic rights ever, because the NWS removed them.
By contrast, the lawsuit in Lamberth's court was brought by shareholders who held their shares before the NWS started. Anyone who bought after that wouldn't have standing anyway. The only reason current shareholders will share in the award rather than past shareholders is that the rights to the damages travel with the shares.
Reasonable shareholder expectations are set by the most recent amendment to the contract before the complained-about action. At the time of the NWS, the most recent amendment to the SPSPAs was the second one that increased the funding commitment amount. On the other hand, for a lawsuit alleging that the LP ratchets violate the implied covenant, the most recent amendment was the NWS itself. Reasonable expectations are very different between those two.
FnF's shares continued to trade in the market after the NWS, but so do shares in bankrupt companies that have no realistic expectation of being in the money in the future. SHLDQ is a good example.
Additionally, the conservatorship is not intended to last forever, as said by various official sources. Therefore, a reasonable shareholder would assume the NWS would end at some point after Treasury has been repaid.
No. The seniors are not and never were repayable. There is no reason to believe Treasury would end the NWS once they were repaid: it in fact did not happen. In addition, Lamberth said that the NWS caused permanent harm. That permanent harm became the reasonable expectation at that point because the NWS became the most recent amendment.
Because you can't NWS a public company.
I guess I have to break out the "king of technicalities" crown again here, but FnF are public companies and also were when the NWS was signed.
That means there is future economic value in the shares.
Wrong. Treasury ending the NWS does NOT mean that economic value has to be restored to the junior pref and legacy common shareholders. As you like to say, there are many ways things can go and we can't foresee all of them. Why, then, do you assume that an end to the NWS must result in a restoration of economic rights to other shareholders?
Trade like a pro: Leverage real-time discussions and market-moving ideas to outperform.
Ask ADVFN Intelligence (AI)
RickNagra
4 hours ago
GVInvestments
7 hours ago
Hot Features
Premium
