Examiners raised several issues in the Federal Housing Finance Agency’s annual report to Congress detailing the work of Fannie Mae, Freddie Mac and the Federal Home Loan Banks.One critical issue in the report, released last week, was the GSEs’ inability to build capital. Examiners said income reductions from shrinking portfolios, coupled with decreases in income from reserve releases and legal settlements and market-to-market volatility from their derivatives portfolio all increase the likelihood of negative net worth in future quarters. Moreover, the examiners said credit-risk transfer initiatives also impose costs that will reduce the GSEs’ earnings. Fannie’s problem assets continued to decline in 2015, but the examiners...