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Monday Morning Cup of Coffee: Fannie and Freddie investors denied profits

Surprise! S&P changes it's outlook for the American economy

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Monday Morning Cup of Coffee takes a look at news coming across HousingWire's weekend desk, with more coverage to come on larger issues.

While the saga of Fannie Mae and Freddie Mac continues to play out, there is one issue that remains tragically unresolved; legacy investments in the government-sposored enterprises. So before conservatorship, equity investors in Fannie and Freddie shared in the losses. But according to several lawsuits against the government, why can they not share in the profits of today?

Gretchen Mortgensen is calling the situation "The Untouchable Profits of Fannie Mae and Freddie Mac," in a weekend column at The New York Times.

"Nationalization would have required the government to provide compensation to shareholders for what it took," she writes. "Now the government gets the benefits of the companies’ profits while avoiding any compensation payments."

Famed investor Kyle Bass successfully got out of Herbalife when the getting was good. He reportedly owned shares of the embattled company, to the tune of $30 million at one point, but the recently filed 13F shows that investment is no more. Other whales have also since left Herbalife.

Beside energy companies, Hayman Capital, the hedge fund run by Bass, is increasing exposure to real estate firms. There are new holdings in specialty servicer Nationstar Mortgage, distressed-home buyer Altisource Residential, and timber supplier Rayonier. Bass is also a large owner in mortgage insurer NMI Holdings.

Here's one real estate attorney that probably should have known better. According to the Herald-Tribune, one of Southwest Florida's most prominent real estate lawyers financed more than $1 million worth of personal real estate during the boom — simultaneously claiming all three homes as her primary residence, which experts say violated her mortgage terms.

"When the economy slumped into recession, that lawyer, Anne Weintraub, defaulted on those loans, costing a federally insured lender an estimated $500,000 in losses, according to a Herald-Tribune investigation," the article states.

And how does Weintraub respond to these explosive allegations? Well, she said the Herald-Tribune has a "vendetta" against her.

Standard & Poor's economics team, led by Beth Ann Bovino, raised its 2014 U.S growth forecast to 3% and increased 2015 to 3.3%. "The testimony by Janet Yellen that the Fed will continue the stimulus policies of Ben Bernanke and not raise short-term rates until unemployment fell further, should also create a favorable environment for consumer credit," said an email from S&P this weekend.

There is a raft of bad housing headlines coming out of New Jersey and New York this weekend. So where to begin?

First there is the New York Daily News article claiming two of Mayor Bill de Blasio’s appointees tasked with achieving his goal of creating 200,000 units of affordable housing have ties to developers whose projects will likely wind up before them in their city posts.

In New Jersey, the Star-Ledger reports millions of dollars in federal housing aid meant for victims of Hurricane Sandy went to projects in counties far removed from those areas most impacted by the storm, an analysis of state data shows.

Nearly a third of the money — $47.6 million, earmarked for new affordable housing projects — landed in Essex and Middlesex counties, while many hard-hit Jersey Shore communities in Ocean saw relatively little of it, writes author Ted Sherman.

Additionally, the mayor of Hoboken, Dawn Zimmer, killed a housing project that would have built 44 housing units at a cost of $3 million — using Sandy relief funds.

According to NJ.com, Zimmer killed the project because of what she called serious design flaws and a failure to include backup generators. 

What a disaster, as they say.

The Federal Deposit Insurance Corp. did not close any banks this weekend. So far, no financial institutions closed in February.

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