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Bubb, Consa And Other Investors

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Guest consa

No. I am probably a bit bias though but I think investors will assume that FM has sufficient funds anyway, Toll Bros will rock builders everywhere and rock global markets. Wimpey is heavily invested in the US and IMO this will hit them hard today, investors may get jittery about other builders now and other property related stocks.

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$200m is nothing compared to the $5bn downward restatement a couple of years back. Stock barely moved.

The interesting thing from a HPC perspective, is why this has only recently come to light - apparently it is due to an error in the software in how interest on certain types of security is calculated - and they didn't used to buy much of these securities until the last couple of years so the error did not come to light earlier. What kind of security? Why mortgage backed securities based on portfolios of consumer "adjustable-rate" mortgages of course...

"Cosgrove said the mistake was not caught earlier because, until recently, Freddie had not been buying the types of securities, backed by adjustable-rate mortgages, that the software apparently mishandled. Over the past year, the company has increased its holdings of such securities by 35 percent, to $236 billion from $175 billion.

As the company shifted to those types of investments, the mistake grew larger and more noticeable. According to a company news release, about $51 million of the error occurred in the second quarter of this year."

What will happen to these variable rate mortgages as long term US interest rates continue to rise? The ability to refinance slips away and short term interest rates start to bite. Could get painful. This is something the US market has not been used to before to this extent in housing cycles.

As for Fannie Mae, Freddie's cousin, the "experts" are as usual of one mind on its future performance: Two brokers, two research notes, same day last week. One "sell" one "outperform" - only a 90% difference in their target prices. If the experts cannot value a supporter of the US housing market consistently what hope have the plebs to value their own homes.

http://www.newratings.com/analyst_news/article_1096478.html

http://www.newratings.com/analyst_news/article_1096668.html

Edited by Tempest

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$200m is nothing compared to the $5bn downward restatement a couple of years back. Stock barely moved.

The interesting thing from a HPC perspective, is why this has only recently come to light - apparently it is due to an error in the software in how interest on certain types of security is calculated - and they didn't used to buy much of these securities until the last couple of years so the error did not come to light earlier. What kind of security? Why mortgage backed securities based on portfolios of consumer "adjustable-rate" mortgages of course...

What will happen to these variable rate mortgages as long term US interest rates continue to rise? The ability to refinance slips away and short term interest rates start to bite. Could get painful. This is something the US market has not been used to before to this extent in housing cycles.

As for Fannie Mae, Freddie's cousin, the "experts" are as usual of one mind on its future performance: Two brokers, two research notes, same day last week. One "sell" one "outperform" - only a 90% difference in their target prices. If the experts cannot value a supporter of the US housing market consistently what hope have the plebs to value their own homes.

Hmmm...guess it`s just me thinking Enron style misbehaviours...as you guys state 200mil is nothing really but strange nevertheless

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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