"In mid-January, President Trump announced an initiative to help ease mortgage liquidity. He instructed Housing Finance Director Bill Pulte to increase the Freddie Mac and Fannie Mae $40 billion caps to $200 billion. The strategy was that the creation of an uptick in mortgage buying liquidity would allow some mortgage underwriting rates to be more flexible, and thus allow for more home finances to manifest."
"Real Estate Investment Trusts (REIT) are real estate based companies that register with the SEC in which they can access the capital markets as long as they remit 90% of profits back to their shareholders. It's a win-win scenario that can result in nice real estate based income for shareholders without the headaches of having to manage and finance physical real estate properties or securities."
President Trump instructed Housing Finance Director Bill Pulte to raise Freddie Mac and Fannie Mae purchase caps from $40 billion to $200 billion to ease mortgage liquidity. The plan intends to increase mortgage buying liquidity, allowing some underwriting rates to become more flexible and enabling additional home financing. The cap increase may be modest relative to the $13 trillion U.S. mortgage market but could gain traction if the Federal Reserve cuts rates and Durable Goods orders are positive. The move reduces privatization prospects for FNMA and FDMC and weighed on their stock prices. Potential beneficiaries include mortgage underwriters, home builders, and home-improvement retailers, with Ellington Financial cited as a REIT example.
Read at 24/7 Wall St.
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