What Are the Most Important Stock Predictions for FNMA?


Quick Answer

As of 2015, one of the most important stock predictions for Fannie Mae, or FNMA, is that the mortgage service provider is going to be unable to recapitalize. This prediction is the result of statements made by the U.S. Treasury’s counselor to the secretary for housing finance policy, reports ValueWalk.

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Full Answer

As of July 2015, the future may not be very promising for FNMA shareholders because there’s a lot that needs to happen before Fannie Mae returns to profitability. FNMA shares are trading at around $2 and have a potential value of between $23 and $47, according to Bill Ackman’s analysis and the Motley Fool. Accordingly, it is inadvisable to invest in FNMA shares because there are high chances that shareholders stand to suffer complete wipe outs.

Another important prediction is that FNMA’s large mortgage investment portfolios may have to wind down more expeditiously. This may occur if the White House implements various initiatives to avoid a complete overhaul of housing finance system. Top on the list of these initiatives is for Fannie Mae to reduce its capital buffers annually in order to eliminate all buffers by 2018. A smaller capital buffer reduces the probability that FNMA might ask for a cash bailout from the U.S Treasury in the event of a major loss, explains ValueWalk.

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