Rising interest rates continue to benefit the Federal Home Loan Banks whose net income was up by more than 10 percent for the first half of the year, according to a report released this week by Moody’s Investors Service. FHLBank net income was $1.83 billion in the first six months of 2018, up from the $1.67 billion a year earlier. This reflected a 10.45 percent increase that was driven by growth in net interest income, partially offset by lower non-interest income. Moody’s noted that yields on both advances and liabilities increased because of higher interest rates. Overall, the net interest margin improved nine basis points to 0.47 percent from the same period in 2017.
The examinations of the Federal Home Loan Banks’ community investment programs were not up to par, according to a recent report by the Federal Housing Finance Agency’s Office of Inspector General, which faulted the program for having examiners review their own work. The report noted that the quality control reviews of community investment examinations didn’t meet FHFA’s standard for independence. In other words, the examination specialists who performed the quality control reviews for community investment examinations didn’t follow FHFA’s guidelines because the specialist was not independent of the examination process. In fact, the IG noted, “All 11 quality control reviews of community investment examinations conducted during the 2017...
The fast-growing multifamily loan programs of Fannie Mae and Freddie Mac are garnering a bit of attention these days – but not necessarily for good reasons. The Federal Housing Finance Agency wants the two mortgage giants to take more precautions when selecting and monitoring their multifamily seller/servicers. Also, the FHFA’s Office of Inspector General and the FBI are investigating a multi-million-dollar mortgage fraud scheme in the multifamily sector that impacted Fannie Mae and Freddie Mac MBS. The FHFA recently issued an advisory bulletin detailing its expectations for Fannie and Freddie to institute proper controls and perform monitoring to identify and manage multifamily counterparty risks.
Fannie Mae and Freddie Mac should focus on things like cash flow projections, diversified funding and identifying potentially adverse events to manage their liquidity risk, according to a new advisory bulletin issued late this month by the Federal Housing Finance Agency. The regulator said it expects the GSEs to use liquidity metrics that coincide with their funds management strategies and provide a comprehensive view of their liquidity risk to make sure enough funds are available, at reasonable cost, to meet potential demands. “Strong liquidity risk management enables an enterprise to be financially sound to perform its public mission and to limit and control shortfalls in cash,” said the FHFA.
Fannie Mae and Freddie Mac should focus on things like cash flow projections, diversified funding and identifying potentially adverse events to manage their liquidity risk, according to a new advisory bulletin issued late this month by the Federal Housing Finance Agency.
John Anzalone of Invesco Mortgage: “In particular, there are a few very aggressive large buyers out there that get a lot of attention and have caused quite a bit of spread compression…”
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