A senate bill that would scrap Freddie Mac and Fannie Mae and replace them with a new entity is wreaking havoc on their share values.
Freddie Mac, Federal Home Loan Mortgage Corp. (OTCBB: FMCC) stock volume shot through the roof Mar. 12, with 61,319,676 changing hands, six times its three-month average volume of 10,320,798 shares, but its share value continues to tumble, closing at $3.32 down 68 cents from its closing price of $4.04 the previous day.
Likewise, Fannie Mae’s (OTCQB: FNMA) stock value closed at $10.90, down $1, from its close of $11.90 the previous day, with a stock volume of 9,568,170, eight times its three-month average volume.
Industry experts say the tremendously high stock volume and Freddie Mac’s and Fannie Mae’s continuing share-value slide is being fueled by new legislation being proposed in the Senate.
Higher Down Payments and Greater Bank Liability
If passed, the bipartisan measure would replace the Fannie Mae and Freddie Mac with a newly- created government reinsurer called the Federal Mortgage Insurance Corp. The new entity, funded by user fees, would then issue a federal guarantee for mortgage bonds that would go into place only after private creditors had taken a minimum 10% hit.
The bill that was drafted by Senate Banking Committee Chairman Tim Johnson and Senator Mike Crapo would require most borrowers to pony up down payments of at least 5 percent.
Currently, Fannie Mae and Freddie Mac own or guarantee 60 % of all U.S. home loans. They provide a steady source of mortgage funds by buying loans from lenders and packaging them into securities they sell to investors with a guarantee.
However, their central role in the mortgage market also led to the horrendous mortgage meltdown and forced the U.S. government o bail them out in the amount of $187.5 billion in the middle of the 2007–2009 financial crisis.
Could Kill Housing Recovery
Opponents of such legislation contend that such a law would literally kill an already tepid housing recovery by pounding a stake in its heart by eliminating easy mortgage financing. They fear that the 5% minimum down payment required of buyers along with the reluctance banks would have making loans they knew they might have to eat will stifle an already weak housing market.
But proponents of the bill say it is long overdue and that the government has no business in the mortgage lending business, which only leads to abuse, meltdowns and bailouts.
Time will tell which of these arguments wins.
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Terra Tech’s Stock Volume and Share Value Continue Upward Trend
Meanwhile in the marijuana sector, Irvine, Calif.-based Terra Tech Corp. (OTCQB: TRTC), a company that provides hydroponic equipment for legal-marijuana growers, stock volume continued to soar Mar. 12 with 17,037,013 shares changing hands, nearly three times its three month average volume of 6,748,316 shares.
The uptick in volume and share value comes on the heels of Terra Tech’s recent announcement that it has formed a team that will focus on medical cannabis opportunities in the Northeast. The team will be headed by Evan Nison, the Executive Director of NORML New Jersey and Co-Founder and Director of New York Cannabis Alliance.
Evan, whose medical cannabis industry beginnings stem from the grassroots movement to tax and regulate initiatives, has been a driving force behind marijuana law reform in both New Jersey and New York. He brings years of experience and success running organizations focused on advocating on behalf of consumers, patients, business owners, and other stakeholders to progress sensible and responsible cannabis reform legislation.
This is just the latest move made by the company to firmly establish itself in the medical marijuana market.
On Jan. 29, Terra Tech Corp (through their subsidiary GrowOp Technology, said it formed a team focused on competing for permits to operate cannabis businesses within the state of Nevada. The team is to be headed by former principal lobbyist for the ACLU at the Nevada state legislature Rebecca Gasca, according to the release.
Hires Heavy-Duty Lobbyist
Gasca is CEO of Pistil and Stigma, a values-driven community and government relations firm that focuses on legislative change, public policy, program development, fundraising, advocacy and public relations. She is former Rotary International Goodwill Ambassador to Chile and recently served as a U.S. State Dept. Legislative Fellow to Nepal. In Nevada, she has lobbied successfully on hundreds of pieces of legislation and her firm worked closely on the medical marijuana dispensary legislation that was signed in to law by Republican Governor Brian Sandoval.
“We aligned ourselves with Rebecca due to her history of expertise in helping shape socially responsible legislation," Terra Tech Corp CEO Derek Peterson, said in a written statement. “She has been on the ground floor in Nevada since the inception of their medical cannabis dispensary bill and was instrumental in its formation. She is heading our team and assisting us in the formation of our applications,” he added.
On Mar. 12, TRTC’s share price closed at $1.40, up 22 cents from its close of $1.18 cents the previous day.
Find out what could be the best investor’s move when it comes to TRTC by getting the complete report here, or by cutting and pasting the following link in your Web browser:
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