The Federal Home Loan Bank System’s net income was up 1.4 percent in the fourth quarter and was off 0.6 percent for the full year. Earnings dropped some in the last three months of the year to $866 million, from $854 million in the third quarter, rounding out the year with a net income total of $3.376 billion. The FHLBank Office of Finance noted that the quarterly decrease was primarily due to lower gains on derivatives and hedging activities. Meanwhile, lower gains on litigation settlements contributed to the yearly decrease. Total assets for the FHLBanks were nearly steady going to $1.10 trillion from $1.09 trillion, and total liabilities were $1.03 billion, both representing greater than 4 percent year-over-year increases for 2017.

The Federal Reserve Bank of New York said the GSEs’ credit-risk transfer programs are a positive step towards reforming the housing-finance system and suggested a few improvements, including expanding the investor base. In a FRBNY report titled “Credit-Risk Transfer and De Facto GSE Reform,” the authors credit the CRT initiative for improving the stability of the housing-finance system and advancing a number of objectives critical to GSE reform. CRTs have reduced the GSEs’ exposure to mortgage credit risk without disrupting the stability of the secondary mortgage market, they said, adding that they have also created a growing new financial market for pricing and trading risk.

GSE shareholders lost their latest battle against the government’s preferred stock purchase agreement as the U.S. Supreme Court declined to hear their case last week. After a lower court ruled against claims arguing the validity of the Treasury sweep of Fannie Mae and Freddie Mac profits, investors hoped to plead their case to the high court. Plaintiffs, including Fairholme Funds, Perry Capital and other shareholders, filed a writ of certiorari last year asking the Supreme Court to intervene in their cases. Both Perry and Fairholme have large holdings of the GSEs’ preferred shares. Back in 2014, a judge for the District of Columbia U.S. District Court dismissed claims brought against the government saying that the Housing and Economic Recovery Act of 2008 gives...

Although Federal Housing Finance Agency Director Mel Watt has nearly 11 months left on his term, that isn’t stopping the mortgage rumor mill from talking about who might succeed him. At the very least, no one in the industry has predicted that Watt, a former Democratic Congressman from North Carolina, would be offered a second, five-year term. Two names that are being actively discussed in the industry are Mark Calabria, chief economist to Vice President Mike Pence, and Craig Phillips, who currently serves as counselor to Treasury Secretary Steven Mnuchin. Of course, just because the industry is talking about them, doesn’t necessarily mean the White House is. Both men are quite familiar with the...

In the latest proposal for reforming the GSEs, the American Enterprise Institute this week recommended winding down Fannie Mae and Freddie Mac by way of “administrative action” to make room for the private market. The conservative think tank said a government guarantee for mortgage-backed securities is not necessary for an effective housing-finance system. Noting that the term of Federal Housing Finance Agency Director Mel Watt expires in January 2019, AEI said many of its recommendations could be implemented by whomever President Trump taps to take over the agency. “This is important since Congress has been unable to develop or agree on a workable housing-finance system since the financial crisis nine and a half years ago,” said AEI.

February was another uneven month in terms of single-family business at Fannie Mae and Freddie Mac.The two GSEs issued a total of $61.04 billion of single-family MBS last month, a 9.5 percent drop from January. A decline in February is not unusual; it’s near the lull in the purchase-mortgage market and has fewer business days. But business levels at the two GSEs were not at all the same. Fannie MBS issuance was down 14.1 percent from January, while Freddie production was up 0.5 percent. Still, month-to-month variation in business flows are common in the GSE market. Fannie and Freddie are also in the process of implementing new capital regimes during the first quarter under the direction of the Federal Housing Finance Agency.

Delinquencies on mortgages largely continue to decline, with strong performance expected ahead. But housing counselors look to be staying busy with an increased emphasis on issues facing potential homebuyers. One factor contributing to improving mortgage performance but hurting affordability is home price appreciation. House prices increased by 6.7 percent on an annual basis in 2017, according to the Federal Housing Finance Agency’s home price index. From the ...

The share price of Fannie Mae and Freddie Mac common has taken a nosedive since the fall, dropping by almost 50 percent, while leaving speculators twisting in the wind and sitting on potentially hundreds of millions of dollars in losses. The reason for the slow but steady decline is hardly surprising: Reform of the government-sponsored enterprises by legislators appears to be a long shot at this point. Moreover, there’s increasing talk in Washington that an “administrative solution” to ...

Half of the six active private mortgage insurers in the market reported solid earnings gains on their core MI business during the fourth quarter of 2017, enough to offset losses at the other three firms. As a group, the private MI industry generated $834.7 million in pre-tax income from their U.S. mortgage insurance operations during the fourth quarter. That was up 7.1 percent from the previous period and raised full-year income to $3.06 billion. The full-year ... [Includes one data chart]

Technology-based, or “fintech,” lenders are revolutionizing the mortgage-lending process with new, innovative ways of doing business, far from the more traditional methods of delivering loan products and financial services, according to a new study by the Federal Reserve Bank of New York. The study, “The Role of Technology in Mortgage Lending,” describes fintech lenders as “lenders that offer an application process that can be completed entirely online.” Fintech lenders have grown ...