Losses rise as Freddie Mac and Fannie Mae stocks delisted from NYSE

Freddie Mac and Fannie Mae, who was the key source of funding that have kept lending to home buyers from totally drying up, were ordered by the government to cease trading all of their shares on the New York Stock Exchange to abide by NYSE delisting rules. Freddie Mac and Fannie Mae stocks, which have already lost nearly all their value within the housing crisis, fell further when the markets got the news. Following the delisting, which was ordered for failing to meet NYSE requirements for sustaining price levels, the stocks of the two companies could be traded in the over-the-counter market.

Article Source: Freddie Mac and Fannie Mae stocks delisted from NYSE, losses grow

Delisting regulations of the NYSE

Freddie Mac and Fannie Mae were delisted because NYSE delisting rules require that a business pull its stock if it can’t take action to keep shares from dropping below the $ 1 average price level for 30 trading days that is required. The Associated Press reports that following the NYSE delisting announcement Fannie Mae shares decreased 42 cents, or 46 percent to 50 cents, when Freddie Mac slid 55 cents, or 45 percent, to 67 cents. In 2007, shares of both companies traded at a lot more than $ 60. As the housing crisis deepened, the stocks lost almost all of their value, plummeting below $ 1 by September 2008. The government took over Fannie and Freddie.

Freddie Mac/Fannie Mae losses

The companies guarantee 31 million home loans worth $ 5.5 trillion. That’s about 50 % of all mortgages within the United States. CNNMoney.com explains to readers that given that September 2008 the Treasury Department has poured $ 83.6 billion into Fannie Mae and $ 61.3 billion into Freddie Mac to cover losses on the mortgage-backed securities they own or guarantee. During the housing crisis, the money has kept lending to home buyers alive, kept home sales and new home construction from falling further than it has, and kept homes from losing more value than they have. But Freddie Mac/Fannie Mae losses totaled $ 93.6 billion in 2009 and another $ 18.2 billion within the first quarter this year. The Congressional Spending budget Office estimates that nearly $ 400 billion in tax dollars will eventually be needed to cover Freddie Mac/Fannie Mae losses, making it one of the most costly of all the government bailouts that they have done in previous years.

Delisted Fannie Mae and Freddie Mac stock by July 8

Fannie and Freddie can have delisted from the NYSE by July 8th. The Wall Street Journal reports the NYSE delisting meets the goals of government conservatorship to preserve and conserve assets. Pulling their stocks off the NYSE will conserve Fannie and Freddie $ 500,000 apiece in annual listing fees. Both companies paid the maximum amount because of the large number of shares outstanding.

Fanny Mae/Freddie Mac OTC stock

Fannie and Freddie stock will be traded over the counter after July 8. Brokers will negotiate directly with one one more for Fannie and Freddie stock over computer networks and by phone. OTC stocks are typically very risky because they are the stocks that are not considered large enough or stable enough to trade on the New York Stock Exchange. It is hard to discover research on these stocks. With the delisting, David Lutz, managing director of equity trading at Stifel Nicolaus and Co. in Baltimore, explained to Business Week that "We lose some transparency into what is basically a large black hole that is eating up a large part of our bailout funds."

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Associated Press

google.com/hostednews/ap/article/ALeqM5gKpMFnJoJc8QkAW3abF41E4d492QD9GCEEC00

CNN Money.com

money.cnn.com/2010/06/16/news/fannie_freddie_delisting/

Wall Street Journal

online.wsj.com/article/SB10001424052748704198004575310443796994402.html?mod=rss_Today’s_Most_Popular

businessweek.com

businessweek.com/news/2010-06-16/fannie-freddie-plunge-after-moving-to-delist-shares-update2-.html