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U.S. Senator Elizabeth Warren urges HUD and Wall Street firms Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) and Freddie Mac to stop selling soured loans to hedge funds and private equity firms. Warren is a leading legislator to pressurize government on stopping the practice.

Make it easy for nonprofits

Representative Michael Capuano and Warren will hold a protest to push mortgage companies’ Freddie Mac and Federal National stop selling troubled mortgages to hedge funds and private equity firms. The representative wants to make it easier for nonprofits organizations to purchase them.

Investment companies have been rushing to bar on house owners rather than amend their delinquent loans. The firms package these mortgages in a way that is almost impossible for nonprofits organizations to compete. The objective of it is these mortgage sales need to have restricting guidelines with basic results for homeowners.

The view

HUD stated that it offered over $17.3 billion of soured loans since 2010, with nearly 95% bought by investment companies. The agency has faced criticism from nonprofit units, whose primary objective is helping communities and borrowers, that its sale conditions favor large investors supported by firms such as Blackstone Group LP and Oaktree Capital Management. It is the same case with mortgage giants Federal National and Freddie Mac.

In April 2015, HUD reported modifications to its asset sale plan needing a year postponement of foreclosures after purchasing the loans and mandating assessment of borrowers for necessary modifications. It also announced additional amendments aimed at enhancing nonprofit organizations participation including providing the firms a first look at vacant assets and giving a non-profit only pool.

The changes

Along with HUD, the government-supported mortgage firms have speed up auctions of mortgages that went sour after the housing crash. In 2014, Freddie Mac began selling nonperforming loans and Federal National commenced bulk sales this year. The FHFA proposed new guidelines for the loan sales in March 2015.

FNMA

Federal National Mortgage Assctn Fnni Me (OTCBB:FNMA) recovered some of the losses incurred in the previous trading session with a gain of 3.74% made yesterday. The volume surged to 2.7 million against the daily average of 2.1 million but the significance of the all the volume pattern and price action may not be too great. The instrument shows a clear contraction phase, as marked on the chart attached, and that coiling action is coming to an end. A rate increase by the US Fed in the near future can’t be ruled out which would resolve this range and trigger a trending move.

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Steve Kanaval: Portfolio Manager/Writer/ Market Analyst Steve began his career in the Trading Pits in Chicago making markets at the Chicago Mercantile Exchange (NYSE:CME) the Chicago Board of Trade and the CBOE in the early 80’s. He ran the Morgan Stanley Derivative Prop Trading for the firm specializing in Index Arbitrage. He continued his career as a Trader/Portfolio Manager for multiple Hedge Funds during the Internet Boom of the 90’s managing large portfolios. Steve is known as an expert in MicroCap Technology Stocks and the emerging Digital Currency markets as a Portfolio Manager for his Family Office. Steve has managed portfolio’s in volatile asset classes for 3 decades as a commodity trader, hedge fund manager and digital currency trader and miner. Steve publishes his views on the asset classes in a public forum and has published more than 10,000 articles simplifying these complex and volatile assets for readers. His work is published on multiple sites including Bloomberg, Equities.com, Hacked.com, CryptoCurrencyNews as a paid contributor. His work includes research, journalism and archived video on important market volatility related to stocks, digital currency and other volatile misunderstood asset classes. He offers a humorous, unique insight and the related back stories and drivers for readers interested in volatility and emerging market assets. Full disclosure Steve is long 25 digital currencies and sits on the board of multiple public companies involved in digital currencies, and owns shares in these companies from time to time.

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