Walker & Dunlop to benefit from stronger GSE volumes, says Keefe Bruyette
Keefe Bruyette says Friday's Commercial Mortgage Alert characterized Fannie Mae (FNMA) and Freddie Mac (FMCC) as 'leaning in on price and structure' to gain market share, with some sources saying they aim to achieve this year's lending caps. The article also cites data from Recursion, showing Fannie Mae's volumes through May at $22.8B, up 48% year-over-year, while Freddie Mac is cited as flat year-over-year through April, the analyst tells investors in a research note. Keefe believes that while macro uncertainty is a risk, stronger government sponsored entity volumes benefit Walker & Dunlop (WD) in particular, as well as Arbor Realty (ABR), CBRE Group (CBRE), JLL (JLL), and Newmark (NMRK).
Confident Investing Starts Here:
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
8 hours ago
- Yahoo
Fannie and Freddie could make hedge funds a huge payday if they go public. One expert wants a ‘utility model' for the Fortune 500 giants
President Donald Trump has long wanted to reprivatize Fannie Mae and Freddie Mac, which have been under government control ever since they needed a $191 billion bailout during the Global Financial Crisis. For Wharton finance and real estate professor Susan Wachter, heavy regulation of utilities and insurance carriers is the best model for the mortgage giants. No members of the Fortune 500 saw their shares surge last year like Fannie Mae and Freddie Mac did. Hedge funds who bought nearly worthless stakes in the mortgage giants after the Global Financial Crisis could stand to make billions if President Donald Trump fulfills his goal to take both firms public. Several experts, meanwhile, remain focused on how to free Fannie and Freddie from government control without repeating the mistakes that helped lead to the 2008 meltdown. Uncle Sam bailed out both government-sponsored enterprises, which provide crucial liquidity to housing markets, when both teetered on the brink of insolvency. After being delisted from the New York Stock Exchange in 2010, their shares continued to trade over the counter. Billionaire hedge fund owners Bill Ackman and John Paulson are among those who snapped them up, betting the U.S. government would eventually make good on its pledge to reprivatize both agencies. With Trump raising the issue on his social media platform last month, it hasn't gone unnoticed that both men have backed the president. 'The subtext of the media stories is that [Fannie and Freddie] shareholders, which include many supporters of [Trump], are looking for a gift from the President,' Ackman wrote in a lengthy post on X last week. 'Nothing could be further from the truth.' Paulson did not respond to a request for comment. Ackman, the CEO of hedge fund Pershing Square, has said ending government conservatorship could reward taxpayers while maintaining widespread home availability and affordability. A host of thorny issues need to be sorted out before executing what would be the largest public offerings in history, many experts warn. Those debates aside, however, there's an even weightier question about how the biggest players in American mortgage markets should operate as private companies. For Susan Wachter, a professor of real estate and finance at the University of Pennsylvania's Wharton School, the heavily regulated model for utilities—where state agencies decide how much companies can charge consumers—has proven its worth. She also sees parallels to the insurance industry, where regulators oversee rates to protect customers while also preventing risk from being underpriced. 'It helps insure against another bailout,' she told Fortune, 'and it helps maintain profits in the long run.' Fannie and Freddie support 70% of America's mortgage market, according to the National Association of Realtors, by purchasing mortgages from lenders and packaging them into mortgage-backed securities, freeing up originators to make more loans. They also guarantee payment on those securities if borrowers default, charging a premium for providing that insurance. There are many explanations floated for why the housing bubble spelled doom for Fannie and Freddie's balance sheets. The main problem, Wachter said, is that when housing prices tanked by about 20% in 2008, many of the loans Fannie and Freddie insured were 'underwater,' meaning the value of the homes securing those packaged loans had fallen below the amount borrowers owed. As they competed for business, Fannie and Freddie had not collected adequate fees to compensate for taking on this risk, Wachter said. 'If these entities go private without oversight, there is a risk of a race to the bottom,' she said. Both institutions also got into trouble by buying large amounts of riskier, private-label mortgage-backed securities to hold as investments. They financed these purchases with cheap debt accessible thanks to the so-called 'implicit guarantee,' or the belief among investors—which ultimately proved correct—that the government wouldn't let the enterprises fail. In short, Fannie and Freddie both juiced profits by 'chasing yield,' becoming what many commentators called the world's largest hedge funds helped by what was, in effect, a government subsidy. Taxpayers paid the price when these bets on risky assets collapsed. Wachter believes reforms instituted under conservatorship have made Fannie and Freddie much more resilient while remaining relatively effective at encouraging middle-class homeownership. The early days of the COVID-19 pandemic provided a major test, she said, when a massive spike in unemployment briefly sparked fears of another mortgage market collapse. 'Fannie and Freddie could go on, continue to lend,' said Wachter, co-director of the Penn Institute for Urban Research, 'even as it offered forbearance to borrowers.' Both enterprises remain central to a fixture of the American dream: the 30-year, fixed-rate, prepayable mortgage. Of course, some question whether continuing to favor that New Deal-era invention is still worth the cost. Last month, Trump said the U.S. government 'will keep its implicit GUARANTEES,' though what he exactly meant remains unclear. Continuing to federally back Fannie and Freddie as private firms would spark fears about a repeat of 2008. Put them completely on their own, however, and mortgage rates likely go higher as investors demand compensation for taking on more risk when buying both enterprises' packaged loans. 'But I think what that debate misses is that if you keep the government backing to these giants, you are going to restrict [the] private market and private competition,' Amit Seru, a professor of finance at the Stanford Graduate School of Business, told Fortune. 'And that means giving up on lots of innovative products.' For example, the U.S. housing market's pandemic boom eventually stalled, partially due to what has been dubbed the 'lock-in effect.' Existing homeowners who bought before mortgage rates skyrocketed in 2022, when the Federal Reserve dramatically hiked borrowing costs to fight inflation, have been reluctant to sell and take out a new mortgage at a higher rate. In many European countries, Seru noted, that's less of a problem thanks to products that allow people to sell their house, buy a new one, and take their existing mortgage with them. That's typically not possible in the U.S., he said, because Fannie and Freddie's dominance means originators can't stray too far from the industry standard. 'No one can compete with the government,' said Seru, a senior fellow at the Hoover Institution, a conservative-leaning think tank. Ackman, meanwhile, sees Fannie and Freddie remaining at the core of the American mortgage market. To facilitate a public offering, Ackman has suggested the Treasury cancel its roughly $350 billion worth of senior preferred shares, meaning it would forgive its right to repayment and dividends. That would remove a massive liability from the enterprises' balance sheets, making them much more attractive to private investors. But the government wouldn't get wiped out. Separate from the preferred shares, it also has warrants that give it the right to buy nearly four-fifths of Fannie and Freddie's common stock at one-thousandth of a cent, or $0.00001, per share. Fannie stock currently trades at about $9, and Freddie is around $7. If Washington cancelled its entire senior preferred stake, the value of the warrants would increase by roughly $280 billion. That would be the most lucrative outcome for Ackman, who alternatively could see the value of his common stock diluted to almost zero if Fannie and Freddie go public without the Treasury cancelling most of its senior stake. '[Fannie and Freddie] shareholders don't have their hands out,' Ackman wrote in his social media post last week. 'The opposite is the case. Hundreds of billions of dollars of funds that belonged to [Fannie and Freddie] were unilaterally taken by the government years ago, and the companies never received credit for these payments.' The U.S. government has collected at least $301 billion in profits from Fannie and Freddie, earning nearly 60% on the $191 billion it paid to bail the mortgage giants out in 2008. Ackman says his plan could pave the way for a similarly sized payday for Uncle Sam in a much shorter window. Wachter and Seru don't necessarily disagree. Still, they ultimately see the government's senior preferred shares as a sideshow compared to bigger questions about what Fannie and Freddie should look like as private enterprises. 'There is a lot at stake here,' Seru said, 'which I think goes well beyond Ackman's investments.' This story was originally featured on Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
9 hours ago
- Yahoo
Trump Wants These 2 Big Mortgage Companies To Go Public: 3 Ways That Could Impact Home Sellers
Posting on Truth Social, President Trump proposed initial public offerings for government-sponsored entities (GSEs) Fannie Mae and Freddie Mac. The GSEs have flip-flopped between the public and private sectors a few times over their history. For You: Read Next: These enterprises buy mortgage loans and bundle them together in mortgage-backed securities that are then bought and traded on public markets. They provide standardized loan programs and reduce risk for lenders and capital investors, which in turn lower borrowing costs. Read on below to see what happens if they revert to being publicly-traded companies, as the president proposes. Also here's how Dave Ramsey thinks Trump is impacting the housing market. In the short term, expect some confusion in the mortgage market. That will add to perceived risk and reduce appetite for mortgage-backed securities — which translates to higher loan rates. 'Privatizing Fannie and Freddie could add volatility to the mortgage market and that uncertainty would trickle down to sellers,' said Samuel Wooten, owner of Two Rivers Properties. 'If rates climb or fewer buyers qualify, homes will sit longer on the market.' Check Out: Fannie Mae and Freddie Mac's mission extends beyond making money. But mortgage banker Bill Dallas of Dallas Capital notes that their mission would change along with their ownership. 'The GSEs' current mission is to facilitate equitable and sustainable access to homeownership and quality, affordable rental housing across America. Private shareholders in the public market demand risk-averse returns and growth however.' So how would they reduce risk? By reducing exposure to lower-income, lower-credit and first-time homebuyers. Real estate expert Austin Glanzer with 717 Home Buyers doesn't see that working out well for sellers in lower- and middle-income markets. 'Tighter lending standards would reduce the buyer pool, especially in markets with lower-income or first-time buyers. For sellers, that means homes would sit on the market longer and some sellers will have to cut prices to attract offers,' he said. Higher mortgage rates and tighter lending standards both push home values in the same direction: down. 'Higher mortgage rates reduce how much buyers can afford,' explained Alexander Kalla, realtor at Keller Williams Bay Area Estates. 'Tighter loan standards reduce the total number of qualified homebuyers. Both would bring down home sales and put negative pressure on home prices.' That said, President Trump stated the government will continue to guarantee the loans bought and bundled by Fannie and Freddie. After a combined bailout of $191.5 billion back in the Great Recession based on a Library of Congress report, the two GSEs repaid the Treasury Department $301 billion in dividends before Treasury released them of that 'profit sweep' obligation in 2019. The Treasury Department still owns stakes in both GSEs, in the form of preferred equity. Taking the two GSEs public could raise a significant amount for government coffers, as a one-time bump. But it remains to be seen just how involved the government stays in regulating their mission — and leaving guarantees in place for underserved homebuyers. Editor's note on political coverage: GOBankingRates is nonpartisan and strives to cover all aspects of the economy objectively and present balanced reports on politically focused finance stories. You can find more coverage of this topic on More From GOBankingRates 4 Housing Markets That Have Plummeted in Value Over the Past 5 Years This article originally appeared on Trump Wants These 2 Big Mortgage Companies To Go Public: 3 Ways That Could Impact Home Sellers Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
Yahoo
a day ago
- Yahoo
Fannie Mae Publishes May 2025 National Housing Survey Results
WASHINGTON, June 9, 2025 /PRNewswire/ -- Fannie Mae (OTCQB: FNMA) today published the results of its May 2025 National Housing Survey® (NHS), which includes the Home Purchase Sentiment Index® (HPSI), a measure of consumer sentiment toward housing. Month over month, the HPSI increased 4.3 points to 73.5. Year over year, the HPSI is up 4.1 points. For more information, access the latest data release or the key indicator data file. About the ESR GroupFannie Mae's Economic and Strategic Research Group, led by Chief Economist Mark Palim, studies current data, analyzes historical and emerging trends, and conducts surveys of consumer and mortgage lenders to inform forecasts and analyses on the economy, housing, and mortgage markets. Follow Fannie Fannie Mae Newsroomhttps:// Photo of Fannie Maehttps:// Fannie Mae Resource Center1-800-2FANNIE Opinions, analyses, estimates, forecasts, beliefs, and other views of Fannie Mae's Economic and Strategic Research (ESR) Group or survey respondents included in these materials should not be construed as indicating Fannie Mae's business prospects or expected results, are based on a number of assumptions, and are subject to change without notice. How this information affects Fannie Mae will depend on many factors. Although the ESR Group bases its opinions, analyses, estimates, forecasts, beliefs, and other views on information it considers reliable, it does not guarantee that the information provided in these materials is accurate, current, or suitable for any particular purpose. Changes in the assumptions or the information underlying these views could produce materially different results. The analyses, opinions, estimates, forecasts, beliefs, and other views published by the ESR Group represent the views of that group or survey respondents as of the date indicated and do not necessarily represent the views of Fannie Mae or its management. View original content to download multimedia: SOURCE Fannie Mae Error while retrieving data Sign in to access your portfolio Error while retrieving data Error while retrieving data Error while retrieving data Error while retrieving data
