The Federal Home Loans Banks’ combined net income for the fourth quarter fell to $791 million, an 8.7% decline from the fourth quarter of 2017. Year-over-year, net income rose slightly to $3.56 billion in 2018. But this apparent stability masked dramatic swings elsewhere on the income statement. [Includes one data chart.]

The Federal Housing Finance Agency last week announced revisions to its final rules pertaining to capital requirements for Federal Home Loan Banks.

Banks held $553.4 billion of Federal Home Loan Bank advances at the end of the third quarter, according to Inside The GSEs analysis of call reports.

Stress tests of the 11 Federal Home Loan Banks went off without a hitch this year. But a closer look reveals varying performance among the banks in the event of a major economic downturn and their relative exposure to the risks measured by the tests.

The Federal Home Loan Bank System last week sold $4.0 billion in bonds with rates tied to the Secured Overnight Financing Rate. SOFR is the designated heir to the soon-to-be-retired London Interbank Offered Rate.

This week, Ginnie Mae issued an all-participants memo dictating new standards for firms seeking to become issuers, including the stipulation that applicants submit to a corporate credit evaluation. Ginnie said the financial exercise will be “similar to those employed by credit rating agencies.” The evaluation will determine whether an applicant is qualified to be an issuer or whether additional criteria should be imposed even if the basic standards are met. Applicants that rely on a subservicer arrangement will be scrutinized even more. The bulletin also notes that, effective immediately, the agency is implementing new notification requirements for MBS issuers engaged in “certain subservicer advance or servicing income agreements, which do not require prior Ginnie Mae approval, but can impact an issuer’s ongoing liquidity position and financial obligations.” While Ginnie currently permits subservicers to advance ...

Increasingly worried about the financial condition of its largest nonbank issuers amid declining market conditions, Ginnie Mae in late October shot off a liquidity letter to 14 companies, asking them to develop contingency plans. The identity of the firms was not revealed to Inside FHA/VA Lending, but it’s no secret which companies rank among the top echelon of issuer/servicers. The five largest nonbank Ginnie MBS servicers as of Sept. 30 are PennyMac Financial Services, Lakeview Loan Servicing, Freedom Mortgage, Quicken Loans and Mr. Cooper. According to the letter, a copy of which was obtained by this publication, Ginnie wants the companies to develop strategies to right-size their operations. One of the agency’s goals is to lay the groundwork for financial stress tests that all issuer/servicers eventually must meet. Ginnie expects to sit down with the executive management teams of the ...

The Federal Housing Finance Agency wants to do away with some of the targeted housing goals for the Federal Home Loan Banks in favor of a more streamlined approach. The regulator issued a proposed rule last week that would remove separate home-purchase mortgage targets for low-income families, low-income areas, very low-income families, and a target for low-income family refinance mortgages. The FHFA recommends replacing those four goals with one succinct goal that doesn’t ...

The Federal Home Loan Bank System’s combined net income dropped 3.0 percent in the third quarter of 2018 but year-to-date profits were still a comfortable 10.4 percent above the same period last year. Advances were down 1.9 percent year-over-year, having dropped 3.9 percent for the quarter. The FHLBank Office of Finance reported that third-quarter net income was $942 million, down slightly from $971 million in the second quarter. But cumulative ... [Includes one data chart]

Certain potential changes could materially affect origination volume and determine the government-sponsored enterprises’ direction going forward, according to analysts. One of those changes could have a significant impact on the FHA market. Wells Fargo Securities analysts recently looked at three potential developments in the Fannie Mae/Freddie Mac sphere and evaluated their effects on the broader mortgage market. Two of those potential changes – loan limits and guarantee fees – are controlled directly by the Federal Housing Finance Agency, while the third relates to the temporary GSE qualified-mortgage exemption, or “QM patch,” which could affect the FHA market. All three factors loom over the mortgage landscape as the FHFA expects a new director in January 2019, who is likely to be more right leaning and could shift the focus back to shrinking the ...