Trump JUST Announced $200 Billion Dollar Housing BAILOUT

Just a day after Donald Trump slammed

institutional real estate investors,

Donald Trump has bailed out the mortgage

market. Yes, folks, this is all in an

effort to post that Donald Trump is the

affordability president. And if you want

more affordability, vote for Donald this

upcoming midterm election because we

need we need to keep control. If you

want your checks, you need to keep

control with Republicans. Donald Trump

is officially directing Fanny and Freddy

to buy $200 billion of mortgage back

securities. Now, hold on. Let me tell

you more about this after I move my

cashews and almonds off my desk since

all these Carnivore people get triggered

by that. [laughter]

I just like nuts. We have Donald Trump

announcing yes indeed $200 billion. Now,

here's roughly how that plays out.

Because Fanny and Freddy don't actually

have $200 billion, they're going to have

to create some kind or come up with some

kind of creative manner to get their

hands on that money, which likely means

they're going to have to utilize the

equity in their portfolios to issue debt

because they do not have the cash

sitting around. Now, I will explain this

in detail, but Donald Trump says that

practically this will drive mortgage

rates down, monthly payments down, and

therefore the cost of owning a home

down, making it more affordable. This is

part of his populist branding to make

life more affordable because we all know

that when the government gets involved,

things always get more af.

So, anyway, what is happening here and

what is this going to do for you and

your ability to get a mortgage? Well,

spoiler alert. It's actually really

great news for your ability to get a

mortgage. And in this video, I'm going

to give you a time frame for not only

when potentially the best time to

refinance might be, but also what kind

of refinance you should do. So, if

you're even thinking about pulling debt

or refinancing your home, I encourage

you to watch the whole video and then

share it with anybody who might be

thinking the same. Now, something I want

to show you in the near term, in the

very short term, look at this. A stock I

literally just bought two days ago is up

16 percentage points in the after hours.

Why? Because it's Loan Depot. I sent an

alert to everybody in the Meet Kevin

membership that we are going into a

long-term era where mortgage companies

are probably going to be really

desirable place over the long term. you

have to buy them as they kind of bleed

out over time because they do because

the long-term trajectory here I think is

up for the mortgage companies because I

think either through Trump's

intervention or the Fed eventually we're

going to see rates come down

substantially. So I think that will keep

playing out but I don't know if this

whole pump is super sustainable. Now

I'll explain why uh in just a moment.

Just a quick reminder if you want those

programs on building your wealth go to

meet Kevin.com. Once you join, once you

get all nine courses, every single trade

alert, including alerts like those and

my theory on mortgages and analyses on

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private live stream and alpha report

every morning before the bell. So,

what's going on? Donald Trump is saying

that these entities have the cash to

provide this $200 billion

allocation to the mortgage bond market

and buy mortgage bond securities.

Unfortunately, this is objectively

false, but that, you know, facts don't

stand in the way of a good story with

Donald Trump. We know that. We know that

looking at a balance sheet isn't fun. I

mean, here's Freddy Mack. Freddy Mack

literally has $4 billion of cash sitting

around. The rest is tied up in either

restricted cash, like commitments that

they've already made to fund loans or

buy loans or buy securities. So, they

got $4.6 billion in cash. Well, that

ain't $200 billion. But Kevin, maybe

Fanny May has the rest of the money. No,

Fanny May has $12 billion of cash. 27 of

uh 7 27 additional that it's restricted,

which uh which has to do with other

agreements that they've already made.

The point is together the companies have

equity of about $160 billion. See total

stockholder equity right here. I got

about 105 here and about 67 over at

Freddy. If you combine it together, 67 +

105, you get to about $172 billion of

equity. In order to actually create $200

billion of cash to go shopping mortgage

back securities to bring mortgage rates

down, they're actually going to have to

issue debt. Now, why does that matter to

you? It matters because this is going to

be a short-term impact. That's my whole

point of explaining this is the reason

you should know about the mechanics of

this is they're going to create some

short-term poopy dupies to make this

happen. Basically, Fanny and Freddy are

going to have to load up to the you know

what in debt, which means somebody has

to provide that capital. By providing

that capital, you could actually take

money away from the Treasury market,

which usually drives down mortgage rates

as the Treasury market relaxes over

time. So, on one hand, you're going to

prop up the mortgage back securities

market, lowering uh yields on the

mortgage back securities market,

hopefully reducing mortgage rates, but

you're going to prop up probably the

10-year because you'll have less people

buying. You'll have created all this

additional debt for the government. So

you're saddling shareholders with $200

billion basically of more debt or

taxpayers, right? Because ultimately

Fanny and Freddy aren't just, you know,

well, they're government sponsored

entities, right? So the government backs

them. So this is really taxpayer debt,

right? We're stimulating by issuing more

debt, which creates inflationary

concerns which could drive the 10-year

Treasury up. So, the impact here, long

and short of it, might be a little

short-lived because this is not like the

Federal Reserve where the Federal

Reserve gets to swoop in and say, "Hey

guys, uh, we're going to create money

out of thin air. This money has to come

from somewhere." Now, once we get over

the inflationary effects of this

additional debt, the additional debt

issuance, the 10-year Treasury going up,

then the money is available. Once that

money is available, then they can start

buying mortgage back securities. This is

all to help you understand when to

refinance. Okay, this is I I love this

kind of stuff. Look at this. Once the

White House makes the directive, which

is basically a truth social post, okay,

we we've seen that. Now, they got to get

approval and clearance from the Treasury

Department, then they got to likely

issue debt, raise money. Like I said,

they don't have the cash. Once they have

the cash, then they can go buy mortgage

back securities. This whole process

right here is probably going to take two

to four weeks. And now, technically, we

could probably jump in and like actually

buy the mortgage back securities pretty

dang fast. The problem is if you buy

them too fast, you risk pulling off what

I call the Michael Sailor issue. The

Michael Sailor issue is where you go in

there and all of a sudden you've bought

so quickly that you've actually

artificially pumped the value of uh

mortgage back securities and you're

really overpaying for them. Which means

you're going to see a really funny

dynamic and this is what I want you to

take advantage of as somebody thinking

about refinancing. This is why you

subscribe to the channel for this kind

of alpha. Okay, ready for this? It's

going to take them two to three weeks or

whatever, maybe four weeks to issue the

money, to raise the money. Okay? Once

they raise the money, what are they

going to do? They're going to go on a

shopping spree like Michael Sailor

buying orange. Okay? This guy sees

orange, he bleeds orange. We don't have

to get down that rabbit hole right now.

But anyway, he's basically willing to

overpay just to get some more orange.

So, you're going to see mortgage back

security prices go up. When mortgage

backed security prices go up, the yields

on mortgage back securities go down.

That's how you contribute, I'll tell you

about that in a moment, to mortgage

rates going down. Okay? So, them

overpaying for these MBS's drives

mortgage rates down. Yes. Yes, it does.

Yes, it does. However, at some point,

people who are dumping mortgage back

securities are going to be very

grateful, first of all, for this extra

bonus to be able to sell this stuff. Uh,

which by the way, who happens to be

dumping mortgage back securities? Oh,

the Federal Reserve is rolling off $35

billion of mortgage back securities per

month, which means Donald Trump has

basically just delayed about $5.7

billion worth uh or sorry, 5.7 months

worth of the Fed rolloff. But see, the

Fed was doing it slowly. 35 a month, 35

a month, 35 a month, 35 a month, 35 a

month, 35 a month. Right? Donald Trump

is coming in going, "Nah, bro. 200." No.

That's going to create distortions,

which means you will probably see

mortgage backed securities do this.

First, they go up, then they come back

down. They probably will go to some

point slightly above equilibrium.

But the point is you want to kind of

refinance

at that peak. Okay? Now, the way to

watch for this is mortgage rates are

going to look like the opposite. they'll

aggressively go down and then you'll

actually see them come up again and then

they'll level off. This will probably

take 2 to 4 weeks, maybe even 6 weeks to

get to that bottom. But as a result of

this, we can make a little calendar for

us. So let's do that. Today is January

8th, 4 weeks from now, Feb 8. This means

probably Feb 8 through at 14 days,

probably Feb 22, probably refinance lock

window. That's probably when you want to

like lock in your refinance. Now, track

it, right? Track it. The way you track

it is watch what mortgage rates are for

a 0 point rate. Do not call up your

lender tomorrow and go, "I want a 5.5%

rate." And they're like, "Sure, that'll

be four points." Don't do that. You want

the 0 point rate. When the 0 point rate

hits 5 point if the 0 point rate gets

down to 5.5%. Oh dude, Goldilocks take

it and run to the bank, baby. Okay,

probably we might bottom out here. 5.75,

take it. Reinance, baby, take it. I

would not lock in my interest rate now.

So I would wait to lock. lock

midFebruary,

track rates daily. Uh if they're done

buying or you see an announcement that

they're done buying, lock in. If you see

rates starting to tick up again and you

know, you hit sort of a floor and now

they're ticking up, lock in. [snorts]

Once you lock, you're usually pretty

stuck, unless you go to a different

lender, right? But that's kind of mean

and and broke and some people do it, but

I don't advocate it. But anyway, so yes,

this will create a refinance boom. Uh

this will be a mini refi boom in Q1,

which will show up in April earnings for

Rocket Mortgage and uh Loan Depot, baby.

And of course, other lenders, maybe to

some extent, figure lending as well.

Now, this little mini refinance boom

could also support the housing market by

increasing prices, right? So, if you

need to sell a property, probably a good

thing to do. If you need to buy,

sure, but be careful because if

everybody has lower rates, you might

slightly be overpaying. Like, my thing

is, I'll wait likely. I probably won't

buy until Q3 Q4 again. That's when I

like to buy real estate. We just blew a

bunch of money on real estate. We're

still renovating it. We're happy. We got

good great deals. We used our reinvest

AI. If you're looking to buy a home in

Q1, hopefully I can't guarantee we're

going to get our valuation a out in Q1,

but we've got this AI uh that is out for

visually identifying the best deals in

your zip code. So, if you have any zip

code in mind and you want a head start

on which properties to look for, go to

reinvest.co or houseack.com. We just

raised $10 million just in December to

uh you know in like 30 days because

people believe in this app and people

are buying the app. They're getting

lifetime access to this because we're

going to switch to the uh annual

recurring revenue model and a monthly

fee soon. But use this if you're going

to be buying this spring. Uh you know,

consider it houseack.com or reinvest.co.

It's the same company. And what's

remarkable is, you know, we'll come out

with our valuation AI. You know, I have

it uh charted over here as Q2 or Q3

somewhere around here. I'm I'm hoping to

get that moving earlier, but you know,

we're going to keep working as hard as

we can to get this out as soon as we

can. That said, what I really want you

to think about is look at this. This is

the Trump administration. The Trump

administration allows Fanny and Freddy

to grow their retained portfolio. uh or

if if Trump allows this, there's no

question we'll have a downward impact on

mortgage rates, probably by at least a

quarter of a point, maybe more. People

are saying between 0.25 to 0.5

percentage points. Some of the pump in

the mortgage market might be temporary

if we end up getting a really good jobs

report. That's also really important to

remember because consider that the

Atlanta Fed real GDP measure is at

insane right now. Atlanta Fed's real GDP

literally just skyrocketed to 5.4 4%

which is crazy. And if the job numbers

tomorrow are strong, your 10-year

Treasury is just going to go up.

Unfortunately, the more the 10-year

Treasury goes up, the more we don't end

up getting lower mortgage rates because

of how a mortgage rate is calculated.

So, remember how this works and and this

really honestly matters a little bit

less for you, but it's worth thinking

about. The way you get this sort of

action working has to do with the

spread. Mortgage rates are created by a

spread or a combination of the spread

between the 10-year Treasury yield, a

spread known as the MBS spread. Uh, and

then you get your 30-year mortgage rate.

Today, that spread is pretty wide. The

10ear is about 4.15. Mortgage rates are

like 6.15 to 6.3. It's a historically

large spread. We're usually only about a

spread of about one and a half. We're at

like two to two and a half right now.

It's a pretty big spread. That spread

does not necessarily have to go down

though just because of this MBS buying

which the free market will likely look

at and go this is just a temporary bump.

We know it's going to come back down and

the free market usually doesn't like

government intervention. It just means

more debt and more inflation. Now keep

this in mind if the economy does

continue to weaken on a job site you

probably don't want to pay any points.

So my general broad recommendation, not

personalized advice, my general

recommendation, general advice, do not

pay points to refinance. So what I would

do, for example, I would usually take

1.5 togative 1.75 points on a refinance.

The reason I'm going to do that is I'm

going to end up like if the 0 point rate

is let's say 5.75%.

Maybe I can get uh at 1.5 points maybe I

can get a 6% rate. So I'm going to have

a little bit higher rate. But as long as

I have that loan for less than about 10

years, I'm going to make more money not

coming out of pocket to pay for my

refinance and some of the property taxes

and other re closing costs. So, I'd

rather take negative points and take a

nocost refinance

in February. That's what I'd be looking

for. Now, you can get the process

started. You can start getting

underwritten. You could start talking to

your lenders. That's on you. Uh, and I

recommend you have it have your stuff

ready. Start getting stuff ready for

your taxes and be ready to actually go

through a refinance. They're typically

going to look for payubs, driver's

license, social security card, your last

two years tax returns, your year-to-

date income. If you're self-employed,

any kind of year-to- date statements,

especially if your income is declining

or volatile, very important, they're

going to want to see some year-to- date

stuff, too. Although, year to date is

only going to be like 30 days, right?

Uh, so pay stubs will help there, again,

unless you're self-employed. But anyway,

yeah, there will be a refinance boom

here. There will be some opportunities

in this. It will not create long-term

affordability because the market will

just normalize probably by the summer.

Now, if the jobs market goes to crap by

the summer, well, rates are going to go

lower anyway and you'll just want to

refinance again anyway. And if you took

a negative point rate, great, perfect.

Then just refinance again. [music] If

the economy keeps booming and you end up

getting, you know, inflation because of

all this debt issuance, then rates can

actually go up, which would be Anyway,

thanks so much for subscribing to the

channel. Make sure to check out the

courses at mekevin.com. Join that alpha

membership. You get all the courses, all

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bundle. And remember, you could get our

artificial intelligence for finding

deals, sniping net worth in real estate

by going to househack.com.

>> Why not advertise [music] these things

that you told us here? I feel like

nobody else knows about this.

>> We'll we'll try a little advertising and

see how it goes.

>> Congratulations, man. You have done so

much. People love you. People look up to

you.

>> Kevin Praath there, financial analyst

and YouTuber. [music] Meet Kevin. Always

great to get your take.