Reps. Randy Hultgren, R-IL, and Gwen Moore, D-WI, introduced a bill in favor of captive insurers maintaining their Federal Home Loan Bank membership. Captive insurance lenders that joined the system prior to January 2016 currently have five years to terminate their FHLBank membership. Those that came into the system after that date have one year to exit the system. H.R. 289, the Housing Opportunity Mortgage Expansion (HOME) Act, would allow the five-year captives to maintain their membership, as long as they can demonstrate a commitment to residential mortgage activities. The bill’s sponsors explained that the legislation supports the notion that companies with a history and mission of supporting residential housing should be able to continue to serve their communities.
Federal Reserve Vice Chair Stanley Fischer said that government involvement in securitization weakened the link between the mortgage loan and the lender. He also warned that another global housing crisis could be looming. During a speech at the FNB-Riksbank Macroprudential Conference in Amsterdam, he acknowledged that Fannie Mae and Freddie Mac MBS helped to expand mortgage credit availability, but added that the rapid rise in credit access coupled with rising house prices can threaten the financial system’s resilience. “One particularly problematic policy is government guarantees of mortgage-related assets,” said Fischer. He mentioned the period leading up to the financial crisis when investors viewed agency MBS as having an implicit government guarantee, “despite the GSEs’ representations to the contrary.”
Congress has GSE reform on the radar and even before this week’s hearing on GSE reform, Sen. Mark Warner, D-VA, said he was optimistic that housing finance reform might happen sooner than many expect. Warner, who co-authored a reform bill four years ago, recently said, “This may surprise some folks, but I think the stars may align where you could actually see housing-finance reform happen in front of some of the Dodd-Frank reform.” The Virginia senator made the comments at a Mortgage Bankers Association conference in Washington, DC, on June 20. He said there appears to be bipartisan consensus on housing finance reform.
Banks, thrifts and credit unions accounted for 50.5 percent of first-lien mortgage production by the top 100 lenders in the first quarter, according to survey figures compiled by Inside Mortgage Finance…
To date, the focus of housing-finance reform has been on Fannie Mae and Freddie Mac, but they aren’t the only government-sponsored enterprises in the current system. The Federal Home Loan Banks wobbled through the crisis without needing a bailout and have been profitable ever since. There’s increasing chatter in Washington circles that the FHLBanks should be addressed in reform too. One key question is the matter of consolidation. There are 11 FHLBanks, each operating with its own management team, highly paid directors and staffs that could be combined. According to former Chicago FHLBank President Alex Pollock, “Discussions of merging the FHLBs are...
RSS