Compensation for directors at each of the 12 Federal Home Loan Banks increased in 2012, continuing a trend begun in 2011 when a director’s earnings “started to show a wide range across the FHLBanks for similar positions,” according to the Federal Housing Finance Agency. The FHFA’s fifth annual report to Congress noted that during 2012, the total fees paid to all FHLBank directors were $12.1 million, ranging from $679,817 for the 14-member board of the FHLBank of Seattle to $1.44 million for the 18-member board of the Indianapolis Bank.Compensation for the position of board chair at the Banks ranged from $60,000 at the FHLBanks of Boston and Seattle to $100,000 or more at the FHLBanks of New York, Indianapolis and Topeka.

“As lawmakers, it is time to open up our eyes and open up our minds to alternative models and a pathway forward,” said Rep. Jeb Hensarling, R-TX, chairman of the House Financial Services Committee, at the beginning of a hearing he convened this week to consider housing finance models without explicit government guaranties. Hensarling, along with many Republicans in his committee, is angling to replace the government-sponsored enterprises with some sort of a non-agency market. However, a number of obstacles exist in that path, including the preference among Democrats and a significant portion of industry players for the GSEs’ functions to be replaced with some form of government guaranty. Most of the witnesses at the hearing provided...

Fannie Mae and Freddie Mac mortgage-backed securities remained the preferred investment choice of the 12 Federal Home Loan Banks during the first quarter of 2013, with a negligible decrease from the previous quarter, while a number of FHLBanks indicated no plans to sell the riskier non-agency MBS in their portfolios. A new analysis and ranking by Inside The GSEs based on data from the Federal Housing Finance Agency found overall MBS investments for the dozen FHLBanks declined 1.0 percent to $137.14 billion between the fourth and first quarters. However, non-agency MBS, which made up 18 percent of the total FHLBank system’s share of MBS during the first three months of this year, fell to $24.69 billion as of March 31, 2013. This was down 2.9 percent from the fourth quarter of 2012 and down 13.5 percent from $28.52 billion from the same period a year ago.

The Federal Housing Finance Agency would see the 12 Federal Home Loan Banks come up with their own internal credit rating system under a proposed rule issued by the FHFA two weeks ago. Published in the May 23 Federal Register, the Finance Agency proposal would remove a number of credit rating references and requirements in certain safety and soundness regulations affecting the FHLBanks. FHFA regulations require the FHLBanks to assess the credit-worthiness of a security or money market instrument that either the Bank is considering investing in or the Bank is helping another financial institution invest in.

The amount of non-agency MBS held by the 12 Federal Home Loan Banks continued its steady decline during the first quarter of 2013. Non-agency MBS investments by the FHLBanks came to $24.69 billion as of March 31, 2013, down 2.9 percent from the fourth quarter of 2012 and off 13.5 percent from $28.52 billion in the same period a year ago. Non-agency MBS made up...[Includes one data chart]

The 12 Federal Home Loan Banks should expect increased “regulatory attention” going forward to ensure their GSE funding advantage remains focused on their mission, the acting head of the Federal Housing Finance Agency told bank directors and executives last week. During a speech at the annual Federal Home Loan Bank Directors Conference in Washington, DC, FHFA Acting Director Edward DeMarco noted that as advances and mortgage assets declined during the economic downturn, FHLBank balance sheets became less “mission oriented.” “Our focus on mission assets is not only an exercise in adhering to the essential mission for which Congress designed the system; it stems from safety and soundness concerns based on recent experience,” said DeMarco.

The watchdog agency charged with overseeing the regulator of Fannie Mae, Freddie Mac and the Federal Home Loan Banks said it plans to remain “active on the law enforcement front.” In its semi-annual report to Congress issued this week, the Federal Housing Finance Agency’s Office of Inspector General gave a tally of its accomplishments for the six-month period ending March 31, noting that it issued 13 audit, evaluation survey and white paper reports, and participated in several criminal and civil investigations.

The director of the Federal Housing Finance Agency would be able to review and revise the take-home pay of Fannie Mae, Freddie Mac and Federal Home Loan Bank executives should the director determine that a senior official’s compensation is “not reasonable or comparable” with the earnings of counterparts in similar businesses, under newly revised agency rule. An interim final rule, published by the FHFA in the May 14 Federal Register authorizes and clarifies the FHFA director’s authority to review and withhold executive compensation at Fannie, Freddie and the 12 FHLBanks in particular. “In view of FHFA’s statutory obligation to prohibit compensation to any executive officer that is not reasonable and comparable, prior review and non-objection rather than review after-the-fact can help set expectations and avoid the need for later remedial action,” explained the Finance Agency.

Preliminary combined net income for the 12 Federal Home Loan Banks fell 12.3 percent to $580 million in the first quarter of 2013, down from $661 million at the end of the fourth quarter and a 20.9 percent decrease from the same period last year, according to the Federal Home Loan Bank Office of Finance. The FHLBank systems’ $153 million year-over-year decrease was driven primarily by lower net interest income, partially offset by lower assessments and non-interest expense. Total FHLBank assets were $738.7 billion on March 31, 2013, down 3.1 percent from $762.5 billion on Dec. 31, 2012, due to declines in investments, advances, mortgage loans and other assets.

The Department of Housing and Urban Development has announced plans to consolidate multifamily hubs nationwide and close a number of its smaller field offices. The plan would result in an estimated $61.9 million in annual costs savings for HUD after completion and affect approximately 900 of the department’s 9,300 employees. No employee will be laid off as a result of the restructuring, according to HUD Secretary Shaun Donovan. Donovan said the changes are part of a broader, long-term effort that will allow HUD to continue to deliver high-quality services by adapting modern best practices. The decision to ...