Word: mae
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...does Fannie Mae have this unique position? As a Government agency, created in 1938, it had little difficulty raising money for its mortgage loans on the private market; but all of these borrowed funds went on the Treasury's books as red ink, swelling the federal deficit. So Fannie Mae became a private corporation in 1968, and last May control of its board of directors passed into the hands of its 7,300 private stockholders. Nevertheless, Fannie Mae remains by law a "corporate instrumentality of the U.S.," and many crucial decisions concerning its borrowing, dividends and other matters...
...recent performance would hardly seem to recommend Fannie Mae as an investment. Net income for the six months ended in June fell to 24? a share, compared with $1.87 a year earlier. The corporation borrows by selling notes, debentures and bonds to big institutional investors, then uses the funds to buy mortgages from mortgage firms across the U.S. Its profits come from the difference between the interest that it pays to borrow and the income that it collects from mortgages and fees. Lately that difference has been precariously small. According to its latest figures, at the end of September...
Buyers of Fannie Mae stock have been gambling that interest rates will continue to fall. Even a modest ½% to 1% drop in the rate that the corporation pays for its funds could cause profits to soar. Reason: Fannie Mae borrows short but lends long. By issuing three-year debentures last week, for example, the corporation borrowed $500 million at an interest rate of 5¾%, the lowest in more than two years. Meanwhile, Fannie Mae will be collecting income on a huge bundle of recently written mortgages-many of them paying 8½%- that run for 30 years. "Fannie...
That enthusiasm is reflected in the atmosphere of Fannie Mae's offices, which now sport bright red and yellow pile carpeting, original oil paintings and plush furniture. Gordon Nelson, the association's press agent, even wears a flashy tie pin engraved with a bull and a bear and the price of the company's stock when it moved onto the Big Board...
High-level Help. Most mortgage men like to do business with Fannie Mae, but some argue that the association is overburdened with debt and competes unfairly against private lenders. For example, they contend that the corporation siphons funds from savings banks and savings and loan associations, which are prohibited by regulation from paying as much as Fannie Mae does to attract money from investors. Says Clarence Ostema, a Manhattan mortgage broker: "It is morally wrong for one Government agency to issue a stock when another Government agency, the Federal Reserve, can make it gyrate and allow speculators to make fortunes...