Fannie/Freddie "noncore" loans include conforming jumbos, mortgages with debt-to-income ratios greater than 43%, investor loans/second properties and cash-out refinances...
In a new report to its shareholders, Fairholme Capital Management notes the fund it manages owns a 4% position in the preferred shares of Freddie, “which currently trade at less than half of stated liquidation values, implying potential current yields of over 14% per annum.”
Lower rates have created a land rush by apartment owners to refinance their multifamily loans, potentially straining the capacity of Fannie and Freddie. However...
There’s been speculation that the Treasury Department this year would suspend the dividend payment to let the two companies build capital, a first step in an administration-backed recapitalization and release plan.
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