Ginnie Mae is considering a risk-sharing pilot that would have private capital absorb some of the potential losses on FHA loans securitized through the agency. In remarks at the Structured Finance Industry Group conference in Las Vegas recently, Michael Bright, executive vice president and chief operating officer with Ginnie, said no decision has been made on any credit-enhancement structure, as consultations with stakeholders are still ongoing. “We are actively looking at structures we can put in place where we bring in private capital to provide a [partial] guarantee,” explained Bright, Ginnie’s acting president. “The FHA is going be involved in a lot of them.” A risk-share partnership between FHA and private credit enhancers not only would protect the Mutual Mortgage Insurance Fund but reduce taxpayer risk as well, observers said. The risk-sharing concept would have private mortgage insurers assuming ...

The Federal Home Loan Bank System’s net income was up 1.4 percent in the fourth quarter and was off 0.6 percent for the full year. Earnings dropped some in the last three months of the year to $866 million, from $854 million in the third quarter, rounding out the year with a net income total of $3.376 billion. The FHLBank Office of Finance noted that the quarterly decrease was primarily due to lower gains on derivatives and hedging activities. Meanwhile, lower gains on litigation settlements contributed to the yearly decrease. Total assets for the FHLBanks were nearly steady going to $1.10 trillion from $1.09 trillion, and total liabilities were $1.03 billion, both representing greater than 4 percent year-over-year increases for 2017.

Legislation was recently introduced to allow captive insurance companies, most commonly real estate investment trusts, to restore their memberships with the Federal Home Loan Banks. Sen. Tammy Duckworth, D-IL, introduced the bipartisan bill along with Sens. Ron Johnson, R-WI, and Tim Scott, R-SC.Any captive insurer that was a member before Jan. 19, 2016, could continue or restore its membership in the system under S. 2361, the Housing Opportunity Mortgage Expansion Act. This would reverse a 2016 final rule that banned captive insurance companies from access to the FHLBanks and said any members that joined the system by way of their captive insurers before the Federal Housing Finance Agency’s proposed rule issued in September 2014 had five years to relinquish their membership.

A bill introduced in the Senate last week with some bipartisan support would allow real estate investment trusts to regain access to funding from Federal Home Loan Banks. The bill would overturn a 2016 rule from the Federal Housing Finance Agency that restricted captive insurance companies from being FHLBank members. Before the FHFA rule took effect, a number of REITs established captive insurers to gain access to FHLBank advances, which come with better terms than ...

The Federal Home Loan Banks may be required to jointly establish at least one entity to aggregate conventional mortgages and use a new government program to issue guaranteed MBS under draft legislation from Sen. Bob Corker, R-TN.

President Trump this week signed a short-term spending bill that would keep the government operating until Feb. 8, 2018. The bill ended a three-day shutdown after the previous spending authority for most of the government expired at midnight on Jan. 19. However, the threat of another shutdown looms. FHA and Ginnie Mae both had contingency plans in place in case the short-lived shutdown dragged on, as it had in 2013. That event lasted for 16 days, at a loss of $1.6 billion a day to the federal government. Under FHA’s emergency plan, the agency would continue to endorse new single-family forward mortgages, but not Home Equity Conversion Mortgages and Title I loans. Ginnie would reduce staffing to essential personnel but continue its secondary market operations. It would continue to remit timely payment of principal and interest to investors, grant commitment authority and support issuance of ...

The total book value of the Federal Home Loan Banks’ eligible collateral was up 21 percent in 2016, rising to $2.8 trillion from $2.3 trillion, according to the Federal Housing Finance Agency’s recently released report to Congress highlighting the amounts and types of collateral pledged to the FHLBanks.Advances over the same period rose by 11 percent from $634 million to $705 million. Reported borrowing capacity was $2.1 trillion. Single-family and multifamily residential loans accounted for the majority of the book value of collateral, both eligible (61 percent) and pledged (58 percent).

Fannie Affordable Housing Challenge. Fannie Mae launched a $10 million challenge to help address the affordable housing crisis. Through the Sustainable Communities Innovation Challenge, the GSE will commit $10 million over two years to attract promising ideas that will help alleviate affordable housing issues. Fannie expects to receive proposals from across the public, private, and nonprofit sectors. Maria Evans, Fannie’s vice president of sustainable communities’ partnership and innovation, said, “With the Challenge, we are looking for new concepts, designs, and ways of solving our nation’s affordable housing issues from innovators who are working inside and outside of the traditional housing industry. Great ideas can come from anywhere.” The goal is to...

The Federal Home Loan Bank of Seattle lost an appeal in an MBS case against Barclays Capital this week in which it claimed the investment banker made false statements or left out certain facts about the securities it sold in 2008. But the Court of Appeals of Washington State ruled that theFHLBank was fully aware of what it was buying at the time.

Banks and thrifts reported holding $575.4 billion of Federal Home Loan Bank advances at the end of September, a quarterly increase of 1.7 percent and the largest volume of advances in the past 12 months, according to an analysis by Inside The GSEs. That number is also well above the number of advances that were made in the third quarter of 2016. Year-over-year, third quarter advances were 6.2 percent higher than the $541.8 billion reported a year earlier. While JPMorgan Chase remains in the number one spot with $63.8 billion in advances, that was down 6.9 percent from $68.5 in the second quarter, and 19.8 percent below the level a year ago.