Latest news for Federal Home Loan (OTC:FMCCI) Stock

Federal Home Loan

Federal Home Loan Mortgage Corp is a US based government-sponsored enterprise. The company invests in mortgage loans and mortgage-related securities. It operates in the following segments: Single-family, Multifamily. Its Single-family segment provides liquidity and support to the single-family mortgage market through a variety of activities that include the purchase, securitization, and guarantee of single-family loans originated by lenders. The company purchases multifamily loans for aggregation and then securitization through the issuance of multifamily K Certificates as well as issues and guarantees other securitization products. Majority of the revenue is earned from single family segment.

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Fannie Mae, Freddie Mac Preferred Shareholders Could See Huge Upside From Conversion Process

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Federal National Mortgage Association (OTC:<a class="ticker" href="/stock/FNMA#OTC">FNMA</a>) and Federal Home Loan Mortgage Corp (OTC:<a class="ticker" href="/stock/FMCC#OTC">FMCC</a>) investors got some good news this week when the Treasury Department and the Federal Housing Finance Agency announced that Fannie Mae and Freddie Mac will be allowed to retain $3 billion of income each in Q4 to start building up a capital cushion.
Now that capital retention is confirmed, Height Securities analyst Edwin Groshans says potential upside for Fannie and Freddie investors hinges on the details of the <a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/11/10852891/fannie-and-freddie-watch-the-latest-news-out-of-washing">housing finance</a> reform bill that is expected out <a href="https://www.housingwire.com/blogs/1-rewired/post/41888-housings-biggest-questions-going-into-2018">in January</a>.
<h3>
	Devil&#39;s In The Details</h3>
&ldquo;GSE capital retention and a legislative vehicle that leads to privatization are positive developments for Fannie Mae and Freddie Mac; however, the potential upside for junior preferred shareholders will be determined by the value allocated to the class in the transition plan, which we expect Treasury and FHFA to develop,&rdquo; Groshans wrote Friday.
He recently sat down and crunched the numbers on how much upside Fannie and Freddie junior preferred shares could deliver if they&#39;re converted to common shares at par value of $50 and $25 at conversion rates of 100 percent, 75 percent and 50 percent.
<h3>
	Path To Upside</h3>
To arrive at his estimates, Groshans divided the par value of the preferred shares by the closing price of the common shares as of Dec. 21 ($2.83 for Fannie Mae and $2.67 for Freddie Mac). Groshans then estimated that the value of those common shares will decline by 35 percent after the conversion process.
If the preferred shares are converted at a 100 percent rate, Height estimates 130 percent average upside for Freddie preferred shares and 117 percent average upside for Fannie preferred shares. Even at a 50 percent conversion rate, Groshans sees an average of 15 percent upside for Feddie preferreds and 8 percent upside for Fannie preferreds.
<h3>
	How To Play It</h3>
Groshans sees the most potential upside for Freddie Mac variable rate series B, G, L, M, and N preferred shares, which he estimates could each more than triple in value if converted at a 100 percent rate. Among Fannie Mae preferred shares, Groshans estimates the most potential upside (at least 160 percent) for series E, M, and G shares.
Here is a rundown of the tickers of the junior preferred shares mentioned above:
<ul>
	<li>
		FED HOME LOAN MTG (OTC:<a class="ticker" href="/stock/FMCCI#OTC">FMCCI</a>)</li>
	<li>
		FED HOME LOAN MTG (OTC:<a class="ticker" href="/stock/FMCCG#OTC">FMCCG</a>)</li>
	<li>
		FED HOME LOAN MTG (OTC:<a class="ticker" href="/stock/FMCCL#OTC">FMCCL</a>)</li>
	<li>
		FED HOME LOAN MTG (OTC:<a class="ticker" href="/stock/FMCCM#OTC">FMCCM</a>)</li>
	<li>
		FED HOME LOAN MTG (OTC:<a class="ticker" href="/stock/FMCCN#OTC">FMCCN</a>)</li>
	<li>
		FED NATL MORT ASSC (OTC:<a class="ticker" href="/stock/FNMFM#OTC">FNMFM</a>)</li>
	<li>
		FED NATL MORT ASSC (OTC:<a class="ticker" href="/stock/FNMAL#OTC">FNMAL</a>)</li>
	<li>
		FED NATL MORT ASSC (OTC:<a class="ticker" href="/stock/FNMAO#OTC">FNMAO</a>)</li>
</ul>
Related Links:
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/12/10945568/a-sea-change-underway-fannie-mae-freddie-mac-to-retain-">&#39;A Sea Change Underway&#39;: Fannie Mae, Freddie Mac To Retain Capital Again</a>
<a href="https://www.benzinga.com/analyst-ratings/analyst-color/17/12/10886250/why-fannie-and-freddie-have-a-path-to-survival">Why Fannie And Freddie Have A Path To Survival</a>
Image Credit: Carol M. Highsmith [Public domain], via <a href="https://commons.wikimedia.org/wiki/File:Federal_National_Mortgage_Association,_or_%22Fannie_Mae,%22_headquarters_building_in_Washington,_D.C_LCCN2011632166.tif">Wikimedia Commons</a>

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Friday, December 22, 2017

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