When It Comes To Penny Stocks To Buy Or Sell, You Should Be Aware Of Certain Sectors. Housing Is One Of These Sectors To Watch
Fannie Mae (FNMA Stock Report) is a nonbank financial services company. Its goal is to tear down barriers, lower costs, and increase the opportunities for homeownership. The penny stock also targets affordable rental housing for all Americans. The company operates in the secondary mortgage market by purchasing mortgage loans and mortgage-related securities, from mortgage market institutions.
This includes commercial banks, savings and loan associations, mortgage banking companies, securities dealers and other investors. Fannie Mae has two business segments namely Single-Family and Multifamily. Most of the revenue comes from the Single-Family segment. Since early June, shares of this penny stock have plummeted. Amid the recent global unrest surrounding China and the US, FNMA stock has been one of the penny stocks to watch for August.
A reform plan for Fannie Mae has been released. However, the Trump administration’s highly anticipated blueprint for mortgage guarantors Fannie Mae and Freddie Mac could see delays. The U.S. treasury is dealing with the ongoing trade war with China, debt ceiling negotiations with Congress and imposing sanctions on Iran. FHFA Director, Mark Calabria, hopes that they would have exited or ready to exit conservatorship before his term ends in 2024.
Can Penny Stock FNMA Recover Before 2020?
Fannie Mae faces many hurdles to remove U.S. mortgages from their government lifeline, which deems to be difficult. As FNMA has been in conservatorship since the 2008 financial crisis, the administration is devising a reform plan for Fannie Mae.
Analysts and experts say this could be very hard to do before the 2020 election. The biggest challenge they face is to not disrupt the marketplace since Fannie Mae is one-sixth of the economy. Recently, however, shares of Fannie Mae stock have recovered. Since hitting lows of $2.02 on July 31, FNMA recovered as much as 16.8% this month.
If Calabria were to remove Fannie Mae from conservatorship without a guarantee, this would likely push up the price of their securities. That could also increase the mortgage cost for homeowners. However, Calabria hopes that congress creates an explicit guarantee for FNMA securities.
Unfortunately, analysts believe lawmakers are unlikely to agree on a guarantee before the end of 2020. Does this make FNMA a penny stock to buy or sell for August?