The Federal Housing Finance Agency adopted a final rule this week that lets non-federally insured credit unions become Federal Home Loan Bank members as of July 5, 2017. Until recently, state-chartered credit unions that weren’t federally insured by the National Credit Union Administration were ineligible for membership in the FHLBank system, unless they qualified as community development financial institutions. But in December 2015, Congress enacted the Fixing America’s Surface Transportation (FAST) Act, which included amending the FHLBank Act to permit non-federally insured credit unions (NFICUs) to become FHLBank members as long as certain requirements are met. NCUA provides the same insurance coverage on deposits as the Federal Deposit Insurance Corp. that insures bank deposits.

Bank and thrift members of the Federal Home Loan Bank system had outstanding advances of $522.5 billion at March 31, a quarterly decrease of 7.2 percent, according to an analysis by Inside The GSEs.But the year-over-year numbers are still up, with the first quarter of 2017 8.6 percent higher than the $481.2 billion reported in the first quarter of 2016. In fact, the $563.3 billion reported at the end of the fourth quarter represented the largest volume of advances for the whole year.JPMorgan Chase continues to lead among borrowers with $74.3 billion in advances, down 6.5 percent from the previous quarter.

Redwood Trust is set to end a slight lull in its issuance of jumbo mortgage-backed securities with a new $349.46 million deal. The firm issued one jumbo MBS per month in the first three months of the year while planned Sequoia Mortgage Trust 2017-4 is set to close at the end of this month, according to presale reports by Kroll Bond Rating Agency and Moody’s Investors Service. At a recent investor conference, Marty Hughes, Redwood’s CEO, said...

A loan exchange operated by MAXEX looks to be a new source of jumbo mortgages. The exchange was recently assessed by Fitch Ratings and loans sourced from the exchange have been included in jumbo mortgage-backed securities issued by JPMorgan Chase. MAXEX was founded in 2012 but didn’t launch its LoanExchange platform until June 2016. Mortgages with an unpaid principal balance of more than $500.0 million have traded on the platform, according to Fitch. “JPMorgan Chase is...

Federal Housing Finance Agency Director Mel Watt is worried that the Federal Home Loan Banks are relying too much on short-term funding of long-term assets. He called this a “funding mismatch.” Watt spoke at the FHLBank Annual Director’s Conference last week about the banks’ performance and said they reported strong net earnings of $3.4 billion in the last quarter. However, he also dished on a couple of supervisory priorities and said he was most concerned about a funding mismatch.” Watt acknowledged that changes in the rules on money market funds have been a significant driver of investor appetite for short-term FHLBank paper, but noted that the FHLBanks can’t afford to think it will always be that way.

The Federal Housing Finance Agency wants to know how Fannie Mae, Freddie Mac and the Federal Home Loan Banks can better help borrowers with limited English proficiency (LEP) throughout the entire mortgage cycle, from lending to servicing. With the numbers of individuals not able to speak English fluently growing in the U.S., the FHFA wants to learn more about some of the procedures and tools that originators, servicers, and other parties in the mortgage lending process currently use to help LEP borrowers. To better understand the challenges, the FHFA issued...

The Federal Home Loan Banks have become too reliant on short-term funding of longer-term assets, according to Federal Housing Finance Agency Director Mel Watt. Speaking at the FHLBank Annual Director’s Conference this week, Watt reiterated his concern from a year earlier that over time a heavy reliance on short-term funding can strain the system’s capacity to issue short-term debt at attractive spreads. He acknowledged...

The Federal Home Loan Bank System saw a 6 percent decline in advances during the first quarter of 2017. The FHLBank’s Office of Finance reported that advances, which stood at $660.7 billion, decreased from $705.2 billion in the previous quarter, primarily because there was less demand by the larger bank members. In fact, all of the banks witnessed a decrease in advances with the exception of two. The FHLBank of Indianapolis and FHLBank of Topeka both had a slight uptick in the volume of advances taken, growing from $28.0 million to $29.6 billion and $23.9 billion to $25.8 billion, respectively.

The Federal Home Loan Bank of New York settled a lawsuit with Lehman Brothers last week stemming from claims the bank undervalued interest rate swaps in 2008. In Lehman Brothers Holdings Inc. v. Federal Home Loan Bank of New York, documents show that the bank will pay $70 million to the Lehman bankruptcy estate. A recent FHLBank of NY filing with the Securities and Exchange Commission revealed...

The Federal Housing Finance Agency said it increased the number of minority and women-owned businesses it awarded contracts to in 2016. But several obstacles make expanding its business with MWOBs complicated. The agency recently released its annual report to Congress, which details initiatives and accomplishments during the year to increase diversity and inclusion. This year’s report also mentioned a diversity and inclusion program to examine the same practices within Fannie Mae, Freddie Mac and the Federal Home Loan Banks. In 2016, the FHFA expanded...