The Federal Housing Finance Agency is reviewing individual members of the Federal Home Loan Banks to help gauge their level of support to the community as part of their membership requirement. This includes making sure those banks are lending to first-time homebuyers.Every two years the FHFA reviews FHLBank members and invites the public to comment on how they help support their communities. Nonprofit housing developers, along with community and advocacy groups, are asked to submit comments to the FHFA by March 31.In order to maintain access to long-term advances, the banks must meet the community support requirements and criteria established by the FHFA.This means that the FHFA will examine the...

The Federal Home Loan Banks Office of Finance announced changes this week to some of their debt programs and said they will allow more securities dealers to participate in their diversity and inclusion program. The FHLBank is planning to incorporate other aspects of diversity, beyond what’s already been established, in order to help expand the scope of dealers eligible to participate in the program. The first change went into effect Jan. 10 when the minimum new issue par amount for negotiated callable bonds decreased. That number will drop from $15 million to $10 million when diversity and inclusion dealers participate in the underwriting group.

A recent audit showed that the Federal Housing Finance Agency needs to do a better job at managing nonbank risks such as mortgage servicing transfers. In response, the FHFA said it will finalize a risk-based proposal to examine how well the GSEs manage that and other risks by the end of this month. The FHFA’s Inspector General said that the agency has not made sure that both Fannie Mae and Freddie Mac are tackling potential risks. The IG noted that out of three advisory bulletins issued that addressed nonbank servicer risk, one of the GSEs only complied with one of the bulletins.The heavily redacted report doesn’t mention which GSE failed to comply with the bulletins, but a...

The Federal Housing Finance Agency late last month issued two final rules that will give the Federal Home Loan Banks somewhat more flexibility in setting collateral requirements for advances and managing their acquired member assets (AMA). A new AMA rule was necessary because the Dodd-Frank Act requires financial regulators to remove references to ratings, which had been used in setting limits on their AMA programs, most of which involve purchases of mortgages from member institutions. Under the new rule, the FHLBanks will be able to choose their own models to determine credit enhancement requirements. The FHFA also deferred...

Member institutions of the Federal Home Loans Bank system had outstanding advances of $541.8 billion at Sept. 30, a slight sequential decline, but a 19.0 percent improvement from the same period a year ago, according to analysis by Inside The GSEs. The FHLBs said the growth in advances was primarily driven by higher demand from larger members. The megabanks, not surprisingly, continued to be the biggest clients of the system with JPMorgan Chase leading the pack at $79.5 billion worth of advances, followed by Wells Fargo ($68.7 billion), Citibank ($31.5 billion), PNC Bank ($17.1 billion) and Capital One ($16.3 billion).

The Federal Housing Finance Agency published a final rule this week allowing the Federal Home Loan Banks to transfer mortgage servicing rights on Acquired Member Assets to any institution, including a nonmember and nonbank. The Dec. 19 final rule reorganizes much of the current regulation governing the FHLBanks’ AMA programs and makes it easier for the banks to take on new business activities. The change was made, in part to recognize the evolving market landscape where a good amount of servicing is being done by nonbanks. The provision noted that any such transfer cannot result in the AMA loan failing to meet any other AMA requirement, including the credit enhancement.

FHLBank Topeka President to Retire. The Federal Home Loan Bank of Topeka announced on Dec. 20 that Andrew Jetter, president and CEO, will begin serving as senior advisor on Jan. 1, 2017, until his retirement date in the first quarter of 2017. Mark Yardley, executive vice president and chief risk officer, will serve as interim president and CEO until a new one is appointed. CBO Suggests Higher G-Fees, Lower Loan Limits. The Congressional Budget Office is looking for ways to reduce the budget impact of government-backed mortgage programs and recommends that Fannie Mae and Freddie Mac increase their guarantee fees and/or significantly lower their loan limits.

The Federal Home Loan Bank System witnessed an increase in earnings for the third quarter, which rose to $861 million, and a year-to-date total of $2,478 million. The FHLBank Office of Finance noted that the quarterly net income increase was due to higher gains on litigation settlements, derivatives, hedging activities and higher net interest income. Additionally, the increase on year-to-date earnings was due to gains on trading securities, partially offset by losses on derivatives and hedging activities. Total assets for the FHLBanks grew to $1.036 trillion, an 8.7 percent increase from the second quarter. Advances represented $688.6 billion, which was driven mainly by higher member demand by larger members. That number is down slightly from the...

Housing Finance Agency’s proposal to loosen regulation of new business activities by the Federal Home Loan Banks generally showed support for the changes but recommended further exclusions from the definition of “new business activities.” The comment period ended on Oct. 24 and the FHLBanks commended the FHFA for its “thoughtful proposal.” Nevertheless, it noted that it would still like to see the agency adopt proposed enhancements to the new business activity regulation. Back in 2013, the FHLBanks wrote the FHFA about their concerns with the burden of existing regulations. The FHLBanks said that the broad scope of the rule requires them to spend a large amount of time and effort determining whether a proposed activity is...

The latest jumbo mortgage-backed security from Redwood Trust includes some differences compared with the two jumbo MBS the firm issued earlier this year. The $343.16 million deal includes loans from many lenders and contributions from a Federal Home Loan Bank program. Sequoia Mortgage Trust 2016-3 received preliminary AAA ratings from Kroll Bond Rating Agency and Moody’s Investors Service. The MBS will include...