Housing finance, beyond Fannie and Freddie

A housing tax credit that helps

There is now a clear consensus in Washington in favor of shrinking the government’s role in housing finance. The tough question that remains, though, is how far to go. Fannie and Freddie have bought or guaranteed nearly half of the home loans outstanding in the United States. Those purchases and guarantees enable banks to sell the mortgages on their books to investors, freeing up the capital needed to make more loans. In ordinary times, their actions helped reduce the interest rate on home loans.

Reminder – Fifth Street Finance (FSC) Goes Ex-Dividend Soon

FSC+Dividend+History+Chart

The House measure is unlikely to become law because it doesnt have any Democratic support, is not backed by some Republicans, and housing industry representatives are lobbying heavily against it. Still, House Republicans could decide to hold out for their position, blocking the Senate effort. Senate Ready This is not about the Senate, said Julia Gordon, director for housing finance and policy at the Center for American Progress, an advocacy group with ties to the Democratic Party. The Senate is ready to move on this. Lawmakers from both ends of the political spectrum say the current situation is untenable: Two out of three new home loans are now backed by Fannie Mae and Freddie Mac (FMCC) , the two government-sponsored enterprises, or GSEs, which puts taxpayers on the hook for additional losses. Fannie Mae and Freddie Mac were seized by regulators in 2008 as defaults on risky loans drove them toward insolvency, and taxpayers have spent $187.5 billion to keep them afloat.

Obama Endorsement Builds Momentum for Housing-Finance Overhaul

Obama Speech on U.S. Economy, Housing Market

As a percentage of FSCs recent stock price of $10.77, this dividend works out to approximately 0.89%, so look for shares of Fifth Street Finance Corporation to trade 0.89% lower all else being equal when FSC shares open for trading on 8/13/13. Click here to learn which 25 S.A.F.E. dividend stocks should be on your radar screen or click here to find out which 9 other stocks going ex-dividend you should know about, at DividendChannel.com Below is a dividend history chart for FSC, showing historical dividends prior to the most recent $0.0958 declared by Fifth Street Finance Corporation: In general, dividends are not always predictable; but looking at the history above can help in judging whether the most recent dividend from FSC is likely to continue, and whether the current estimated yield of 10.67% on annualized basis is a reasonable expectation of annual yield going forward. The chart below shows the one year performance of FSC shares, versus its 200 day moving average: Looking at the chart above, FSCs low point in its 52 week range is $9.66 per share, with $11.13 as the 52 week high point that compares with a last trade of $10.79.

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