In the midst of the sharpest economic drop since the Great Depression, prompted by the COVID-19 pandemic, Fannie Mae and Freddie Mac said they are looking for financial advisors to underwrite what is likely to be the largest public share offering in U.S. history.
The timing of the announcement underscores the Trump administration’s determination to end the conservatorship of the world’s two largest mortgage financiers. The GSEs have to move quickly if they want to ensure they exit conservatorship before the November election, which could put a different administration in charge, said Jaret Seiberg, managing director of Cowen Group in Washington D.C.
It’s possible to hire financial advisors and handle the pandemic-induced turbulence in the housing market, said Fannie Mae CEO Hugh Frater. About 8% of U.S. mortgages are now in forbearance after borrowers lost jobs because of COVID-19 shutdowns, according to the Mortgage Bankers Association.
Fannie Mae and Freddie Mac are government-sponsored entities (GSEs) that act as links between banks and lenders, the federal government, and private investors. Their mission is to provide easy access to funds, or “liquidity”, to thousands of banks, savings and loans entities, and other mortgage companies that lend to homebuyers. Zillow has 2 homes for sale in Orlando FL matching Fannie Mae. View listing photos, review sales history, and use our detailed real estate filters to find the perfect place.
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“While we are fulfilling our mission and helping to keep people in their homes during this national emergency, we also remain committed to ensuring a responsible exit from conservatorship,” Frater said.
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The financial advisors will assess the company’s valuation, review its business plan, identify options for raising capital and evaluate regulatory considerations during a transition period, Freddie Mac said in a statement.
For the record, putting shares of Fannie Mae and Freddie Mac up for sale wouldn’t be “initial public offerings,” because Fannie Mae began trading on the New York Stock Exchange in 1968, and Freddie Mac began trading on the same exchange in 1989.
The “offering” would be the 80% of Fannie Mae and Freddie Mac preferred stock held by the federal government since 2008. The remaining 20% trades over-the-counter.
The size of the share offering may be as high as $200 billion, which would make it the largest offering in history. It would beat last year’s IPO of Saudi Aramco, the Saudi Arabian government’s petroleum and natural gas company. It raised $25.6 billion on Dec. 5, beating Alibaba’s $25 billion IPO in 2014.
The stocks of both GSEs were priced at about $1.60 in the hour before the GSEs announced at the 4 p.m. close of trading on Monday they were searching for financial advisors.
Shares of the companies once traded above $68 and were considered as safe as U.S. Treasuries because of an implied government backing. They were kicked off the NYSE after they were seized by the government during the 2008 financial crisis and became penny stocks.
In November 2008, you could have bought a share of Fannie Mae for 54 cents.
Fannie Mae foreclosures are properties that are currently under the possession of the Fannie Mae foreclosed homes program due to homeowners' failure to pay off loans purchased by Fannie Mae from the original lenders. As government sponsored financing agencies, freddie mac and fannie mae foreclosed homes are priced lower than other properties typically sold at auction or on the foreclosure market.
While HUD foreclosures are real government owned properties, foreclosures for sale by Fannie Mae have more in common with private REO properties. As the economic recession has settled in however, the government has assumed more control over these sponsored agencies through the current government issued bailouts. In an effort to protect the real estate market from declining any more than it has, all offers are being considered and foreclosures are selling at deep discounts.
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Buying Fannie Mae properties is a great investments for anybody - even people with bad credit can learn how to buy these properties. Fileopen plugin for adobe flash player. Fannie Mae loans are designed to help people with less than perfect credit invest in these great properties with an affordable home loan from their own lending program. The properties available are located countrywide and their high quality construction combined with their super low prices make them highly sought after by homebuyers. Any fannie mae foreclosure property will become more valuable as the market regains strength and home values begin to rise.
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