The growing possibility of the passage of a Senate bill that would eliminate Freddie Mac and Fannie Mae and replace them with a new entity is continuing to erode their share values with a vengeance.
Freddie Mac, Federal Home Loan Mortgage Corp. (OTCBB: FMCC) stock volume continued to shoot through the Stratosphere Mar. 18, with 30,523,885 changing hands, nearly three times more than its three-month average volume of 11,874,627 shares. But its share value continues to tumble, closing at $3.03 down 71 cents from its closing price of $3.74 the previous day.
Even Preferred Stock Taking a Hit
Likewise, on Mar. 18 even Fannie Mae’s (OTCQB: FNMAS) preferred stock value closed at $10.05, down 60 cents, from its close of $10.65 the previous day, with a stock volume of 3,911,600, more than double its three-month average volume of 1,653,253 shares.
Industry experts say the tremendously high stock volume and Freddie Mac’s and Fannie Mae’s continuing share-value slide is still being fueled by the possibility the new legislation being proposed in the Senate might get closer to passing despite it being an election year.
Greater Bank Liability and Higher Down Payment Requirements
If this happens, 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 to bail them out in the amount of $187.5 billion in the middle of the 2007–2009 financial crises.
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Could Stop 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. As of now, just the possibility of such a bill passing is pushing Fannie Mae and Freddie Mac shares down.
A Ray of Hope
However, there is a ray of hope shining through for the housing market coming from a new Fannie Mae survey.
Americans' outlook on housing and the economy has fluctuated somewhat during the past few months, but the trend for most indicators remains positive overall, according to Fannie Mae's February 2014 National Housing Survey results.
Notably, respondents' home price expectations climbed significantly in February - with 50 % saying home prices will go up in the next year - following a measurable downturn in January, while the share of those who believe it is a good time to buy a home ticked up by 3 percentage points.
At the same time, those who believe that it would be easy to get a mortgage dropped 7 percentage points from January's all-time survey high of 52%. Additionally, the share of respondents who say the economy is on the wrong track increased 3 percentage points to 57% in February, following a four-month decline. Despite a decrease in optimism across some of the indicators last month, consumer attitudes remain in generally positive ranges.
Green Cures Inc. Takes over Triton and Acquires FutureMarijuana.com
In other news, as of Mar. 5, Green Cures Inc. has taken over Tiburon, Calif.-based Triton Distribution Systems Inc. (OTC Pink: TTDZ), a development-stage company targeting travel services distribution, has offered little in the way of news.
Green Cures operates a diverse portfolio of services and products within the medical marijuana and botanical industry, as permitted by law. In this rapidly growing industry of alternative care field, Green Cures says it also brings to the online community portals with information and resources regarding the benefits of cannabis-derived products.
The company added that it is in the process of forming a new board of directors and appointing new officers that will be managing the company. Upon the finalization of the new board of directors and complete list of officers, the company is planning to announce publicly all names of the new management team.
On Mar. 5, Green Cures Inc. and Triton Distribution Systems announced the acquisition of FutureMarijuana.com and its online network portfolio. The acquisition of this portfolio is of significant value to Green Cures Inc. present and in future operations.
Green Cures, Inc. management decided to add additional partnerships that will enrich its business resources, including those with licensed agricultural cooperatives in the state of Colorado; as well as, production, marketing and distribution of Cannabidiol (CBD) products labeled “Green Cures.” Therefore, the company acquired CBDColorado.com, CBDOil.us, and CDBCenters.com. Cannabidiol also known as CBD is the second most prominent ingredient found in the Cannabis plant accounting for up to 40% of the plant's extract.
According to scientific and clinical studies, Cannabidiol-CBD has the potential to be a cure for a wide range of conditions, including epilepsy, arthritis, rheumatoid, diabetes, alcoholism, chronic pain, schizophrenia, PTSD, antibiotic-resistant infections, and other neurological disorders. CBD has demonstrated neurogenic and neuroprotective effects and its anti-cancer properties are currently being investigated at several academic research centers in the United States and elsewhere, the press release added.
On Mar.18, TTDZ’s share price closed at 0.0143 cents, down 0.0022 cents from its closing price of 0.0165 cents the previous day on volume of 91,263,952 shares.
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