Redwood Trust has seen strong demand from borrowers and correspondent lenders for its “expanded prime” program that the aggregator introduced last year. The real estate investment trust’s Choice products allow for somewhat looser underwriting than the super-prime mortgages that have dominated the jumbo market after the financial crisis. The Choice program was introduced in April 2016. Volume has increased relatively quickly and could top $1.0 billion this year. Officials say...

The U.S. Attorney for the District of Texas indicted the former CEO of the Federal Home Loan Bank of Dallas, along with two other former bank employees, for fraud. They were accused of creating fake travel reimbursement requests for lavish trips and embezzlement schemes that began back in 2008. Terrence Smith, at the helm of the bank from 2000 to 2013, and Nancy Parker, chief information officer around the same time, were charged with six counts of making false statements, according to the Department of Justice. And Michael Sims, chief financial officer from 2005 to 2014, was charged with three counts of making false statements.

GSE Conservatorship Hits Nine Year Mark. It’s been nine years since the government placed Fannie Mae and Freddie Mac in conservatorship on Sept. 6, 2008. No one knew it would last this long. Industry groups, along with some lawmakers, are working hard to put the wheels in motion to come up with a more sustainable solution for the mortgage giants. GSE shareholders group Investors Unite suggested, “If Fannie and Freddie could start retaining their profits and rebuild adequate reserves, the Trump administration could lock in reforms already in place and implement others, creating a federal role in housing finance that protects taxpayers.” GSE Hearing Postponed

New CIO for Freddie. Freddie Mac named Stacey Goodman as executive vice president and chief information officer. She will begin on Sept. 25 and brings more than 25 years of technology experience in the financial services industry. In her role, Goodman will lead the Information Technology division and provide corporate-wide leadership for all the company's technology activities. Previously Goodman was executive vice president, chief information and operations officer at CIT. Prior to that she held several roles at Bank of America, last serving as managing director and divisional CIO of global technology & operations. Goodman will be a member of the senior operating committee and will report directly to CEO Donald Layton.

Officials at Starwood Property Trust announced last week that the company will acquire non-qualified mortgages with funding provided by new membership in the Federal Home Loan Bank system. Starwood is a real estate investment trust that has traditionally focused on commercial mortgages. Starwood said it gained membership in the FHLBank of Chicago shortly after the end of the second quarter of 2017. Jeffrey DiModica, president of Starwood, said the REIT will ...

Members of Congress have left Washington, DC, for their summer recess, and mortgage industry representatives are using the time to plan strategy and educate lawmakers on key issues to help propel a number of measures across the finish line before the year ends. The most time-sensitive issues are reauthorizing the national flood insurance program and setting budgets for FHA and Ginnie Mae activity in fiscal 2018, which begins Oct. 1, 2017. Lawmakers will be looking to deal with these in September. Authority for the National Flood Insurance Program expires...

The Federal Home Loan Bank System saw a 7 percent increase in advances during the second quarter of 2017. The FHLBank’s Office of Finance reported that advances stood at 706.8 billion, at the end of June, up from $660.7 billion reported in the previous quarter. The combined net income for the second quarter was $844 million, up from $812 million the previous quarter. The OF attributes the upswing to an increase in net interest income, partially offset by lower gains on litigation settlements. For the first half of the year net income was $1.66 billion representing a 2.2 percent increase from a year...

The Federal Housing Finance Agency, although late to the game, is proposing new capital requirements for the Federal Home Loan Banks to comply with the Dodd-Frank Act. Other regulators have already implemented the Dodd-Frank Act provisions that shift capital requirements away from ratings. This proposed rule would carry over most of the existing regulation without any major change, but it would revise the credit risk component of the risk-based capital requirement, along with limitations on extensions of unsecured credit. Currently banks calculate credit risk capital charges and unsecured credit limits based on ratings issued by a nationally recognized statistical rating organization. But the proposed rule would require the banks to use their own internal rating methodology.

Reps. Randy Hultgren, R-IL, and Gwen Moore, D-WI, introduced a bill in favor of captive insurers maintaining their Federal Home Loan Bank membership. Captive insurance lenders that joined the system prior to January 2016 currently have five years to terminate their FHLBank membership. Those that came into the system after that date have one year to exit the system. H.R. 289, the Housing Opportunity Mortgage Expansion (HOME) Act, would allow the five-year captives to maintain their membership, as long as they can demonstrate a commitment to residential mortgage activities. The bill’s sponsors explained that the legislation supports the notion that companies with a history and mission of supporting residential housing should be able to continue to serve their communities.

To date, the focus of housing-finance reform has been on Fannie Mae and Freddie Mac, but they aren’t the only government-sponsored enterprises in the current system. The Federal Home Loan Banks wobbled through the crisis without needing a bailout and have been profitable ever since. There’s increasing chatter in Washington circles that the FHLBanks should be addressed in reform too. One key question is the matter of consolidation. There are 11 FHLBanks, each operating with its own management team, highly paid directors and staffs that could be combined. According to former Chicago FHLBank President Alex Pollock, “Discussions of merging the FHLBs are...