Efforts in the Senate and House to reverse the Federal Housing Finance Agency’s rule that ended captive insurer membership in the Federal Home Loan Banks is getting pushback from a handful of FHLBanks. Six FHLBank presidents wrote lawmakers to express their strong opposition to reversing the final rule on FHLB membership issued in January 2016. They included the FHLBanks of Des Moines, New York, Pittsburgh, Topeka, Boston and Dallas. Among them, they serve financial institutions in 33 states. Despite receiving hundreds of comments against the proposed rule, the FHFA implemented the ban because it was concerned about the growing number of captive insurers gaining FHLBank membership access to take advantage of cheaper financing.

A proposed rule that was touted to give Federal Home Loan Banks more flexibility in allocating their affordable housing funds is catching heat from many industry stakeholders. In fact, many deemed the proposed rule, issued on March 14, too complex to digest during the initial 60-day comment period and asked for an extension. One of the groups, the National Association of Home Builders, said, “The complexity and magnitude of the revision make the 60-day comment period an extremely difficult timeframe in which to assess and respond to the proposal.”The comment period was extended by 30 days and closed last week. There were 404 comments in all and more than 100 came in on June 12, the last day to offer input.

Banks and thrifts reported holding $554.0 billion of Federal Home Loan Bank advances at the end of March, a quarterly decrease of 4.9 percent and the lowest volume of advances since the first quarter of 2017 when they stood at $522.5 billion, according to an Inside The GSEs analysis.On a year-over-year basis, that represents a 6.0 percent increase in advances overall. While JPMorgan Chase remains in the number one spot with $56.9 billion in advances, that number continues to represent a downward spiral from the previous four quarters. In the first quarter, Chase had $60.6 billion in advances.

Reverse mortgage lenders started out strong in the first three month of 2018 with a 19.2 percent increase in Home Equity Conversion Mortgage production from the previous period. HECM endorsements totaled $5.4 billion in the first quarter, with purchase reverse loans accounting for the bulk of originations, 81.9 percent. First quarter production was up 18.5 percent from the same period last year. Meanwhile, HECM mortgage-backed securities issuance totaled $2.97 billion for the quarter, down from $3.25 billion in the prior quarter, Ginnie Mae data showed. The top five HECM originators in sequential order – American Advisors Group, Reverse Mortgage Funding, One Reverse Mortgage, Liberty Home Equity Solutions, and Synergy One Lending – accounted for $1.66 billion, or 30.8 percent, of total production during the first quarter. American Advisors maintained its top ranking with $841.4 million of HECM loans, which ... [Charts]

The Federal Home Loan Bank of Seattle lost another round recently when the U.S. Court of Appeals in Washington ruled to dismiss its mortgage-backed securities claim against RBS Securities, even in light of newly discovered information in the case. In the suit, the FHLBank of Seattle alleged that it relied on RBS’ prospectus supplement to purchase $200 million in MBS back in 2006. The plaintiff said that the information provided about the MBS was not sufficient, and in fact, it included “untrue or misleading” statements. This was in relation to the loan-to-value ratio of the loans as well as the origination and underwriting...

California continued to lead all states in FHA and VA mortgage securitization in the first three months of 2018. The Golden State accounted for 15.3 percent of the $50.6 billion of FHA loans delivered into Ginnie Mae mortgage-backed securities in the first quarter. FHA loans comprised 18.2 percent of loans securitized by Fannie Mae, Freddie Mac and Ginnie Mae, and 34.6 percent of agency-securitized loans with primary mortgage insurance. About 66.6 percent of FHA loans securitized during the period were for purchase mortgages while refinance loans accounted for 27.5 percent. The average loan-to-value ratio of FHA loans in Ginnie pools was 93.0 percent. The average credit score of 668.2 reflected FHA’s traditional base of lower-income and first-time homebuyers, with an average debt-to-income ratio of 42.4 percent. The other states among the top five in terms of FHA deliveries into Ginnie pools were ... [Chart]

Treasury Official Sees Major Impact from Single Security. A key Treasury Department official suggested that issuers of non-agency MBS may someday participate in the common securitization platform being developed by Fannie Mae and Freddie Mac. Craig Phillips, counselor to the Treasury, said the industry has made a lot of progress toward the launch of the single security that is scheduled for June 2019. “Industry preparedness is about an eight or nine on a scale of 10,” he said during remarks at this week's secondary market conference sponsored by the Mortgage Bankers Association in New York. Phillips characterized the...

The Federal Home Loan Banks will be able to use their own models and methodologies for internal assessments of mortgage asset credit risk next year, according to a bulletin issued by the Federal Housing Finance Agency late this week. The FHFA provided guidance on the models, which would apply to acquired member asset (AMA) mortgage pools, mortgage-backed securities, and collateralized mortgage obligations. “A bank should select a credit-risk model that is capable of producing loan-level estimates of potential credit loss, and that can accept as an input user-defined macroeconomic stress scenarios disaggregated to at least the state level,” said the FHFA.

The Federal Housing Finance Agency Office of Inspector General said the FHFA did not make sure that Freddie Mac’s plans to address cybersecurity deficiencies were sufficient. Instead, the agency questionably closed the matter requiring attention (MRA) after deciding on its own that the GSE had completed its planned remedial actions.This raised a red flag with the OIG, which said when an MRA is issued, the FHFA requires the GSE to provide a remedial plan that includes specific milestones that take into consideration the complexity of the issue and the urgency regarding the correction.

The Federal Housing Finance Agency is proposing to amend its regulations on the responsibility of the board, directors, corporate practices, and corporate governances for the GSEs and Federal Home Loan Banks. It also would apply the FHLB strategic business plans to Fannie and Freddie. This means that the GSEs’ boards would have a strategic business plan in effect at all times, which describes how the regulated entity will achieve its statutory purposes. Moreover, there’d be a provision that requires each GSE board to review the strategic plans annually, re-adopt it once every three years, at minimum, and...