home subscribe advertise reprints e-mail help RSS about us LOG IN

Mortgage News


Mortgage News

HOT Topics









site map

twitter linkedin
facebook google+

Mortgage News

News by Subject
Complete list of specialty news sections.

Purchase Subscription
Subscribe to MortgageDaily.com and get immediate access to all news, statistics and archives.

Mortgage Advertising
Reach mortgage executives, loan originators and other people tied to mortgage industry.

Consumer Mortgage News
Free mortgage news for prospective borrowers.

Mortgage Newsletter
Free e-mail newsletter with the latest headlines from MortgageDaily.com.

Mortgage News Reprints
Put entire MortgageDaily.com stories in your online or printed newsletter or publication.

Mortgage Feedget RSS code
Condensed MortgageDaily.com stories free on your Web site or for your RSS reader.

News Archives
Archive of MortgageDaily.com stories by month going back to 1999.

Press Releases
Reports and announcements from MortgageDaily.com.

Mortgage Statistics
Data and statistics for real estate finance.

Mortgage Directories
Directories of lenders, branch operators and mortgage service providers.

Mortgage Graphs
Directories of lenders, branch operators and mortgage service providers.

GSE News | Fannie/Freddie Share Statistics
Fannie, Freddie and FHLB news. Coverage of government sponsored enterprise regulation, operations and litigation.

FHLBs Could Face Massive Losses

Moody's says unrealized losses on MBS portfolio are $13.5 billion

January 8, 2009 (revised 4:15 p.m.)

By MortgageDaily.com staff

The Federal Home Loan Banks could face more than $13 billion in losses on their private-label mortgage-backed securities portfolio depending on how their regulator interprets accounting rules, a ratings agency report said. A worst-case scenario has all but four of the banks under-capitalized.

The FHLBs held $76.2 billion in private-label securities as of Sept. 30, 2008, Moody's Investors Service said in a report today. But the market value of the portfolio was only $62.7 billion.

Moody's said GAAP accounting rules might require the FHLBs to account for the securities as other-than-temporary impairments in the short term. Such a situation would require the government sponsored enterprises to recognize unrealized losses of $13.5 billion -- a "material" amount in terms of capital base.

The report indicated that only four of the 12 FHLBs would remain above regulatory minimums in an unlikely worst-case scenario.

A capital impairment could be significant since the role of the FHLBs has become increasingly important in the current credit cycle, New York-based Moody's said. They are owned by their member institutions, which have received desperately needed cash advances in exchange for collateral.

Michael Ciota, who is with the FHLB's Office of Finance, told MortgageDaily.com in a statement that virtually all of the MBS it acquired were rated AAA when purchased.

"In fact, the FHLBanks typically require structural credit enhancement beyond that needed for a triple-A rating," Ciota said. "As a result, the credit performance of our private-label MBS remains quite good, and this is reflected by the Moody's analysis -- the expected economic loss on the entire portfolio is less than $1 billion, or less than 1 percent of par."

The report's author, Brian Harris, said the impact of losses on capital levels is likely to become more evident during the first half of this year.

"The impact could have important ramifications -- both in terms of more limited, more expensive access to the capital markets and of heightened regulatory supervision due to the breach of regulatory capital minimums," Harris stated.

Harris speculated that the FHLBs' regulator -- the Federal Housing Finance Agency -- will focus on capital preservation because of the importance of FHLB activity. He said Moody's projects that ultimate losses will be less than losses incurred under other-than-temporary impairments.

"Should the regulator believe that the other-than-temporary impairments losses of any individual FHLBank will crystallize into realized losses, its actions could be severe, including conservatorship or a forced merger into a healthy FHLBank," the report said.

Ciota noted that the "FHLBanks are working together to meet the challenge of other-than-temporary impairments in the current distressed market, and plan on providing enhanced financial disclosure during Q1 so interested parties can better assess our current condition."

Corporate Mortgage News
M e r g e r s, a c q u i s i t i o n s and private and public offerings. Other corporate activity including executive appointments, bankruptcies name changes.

SUBSCRIBERS: Edit Subscription | Subscription Help | or call 214.521.1300

Subscribe Contact Us Site Map

Copyright © 2017 Mortgage Daily, D a l l a s
Subsribers Only:

AMC directory

ARM indexes

mortgage company directory

mortgage regulations

net branch directory

p r i c i n g engine directory

wholesale lender directory

More Mortgage News Resources (full site map):

advertising news

appraisal news

bank news

biggest lenders

commercial mortgage news

corporate mortgage news

credit news

FHA news

financial regulation news

foreclosure news

GSE news

jumbo mortgage news

interest rates

loan modification news

loan originator survey

LOS Newsletter


mortgage associations

mortgage-backed securities

mortgage books

mortgage brokers

mortgage compliance

mortgage conferences

mortgage directories

mortgage education

mortgage employment

mortgage employment index

mortgage executives

mortgage fraud

mortgage fraud blog

mortgage fraud local news

Mortgage Fraud Index

Mortgage Graveyard

mortgage insurance news

mortgage lawsuits

mortgage leads

mortgage lender ranking

mortgage licenses

mortgage litigation

Mortgage Litigation Index

Mortgage Market Index

mortgage mergers

mortgage news

mortgage politics

mortgage press releases

mortgage production

mortgage public relations

mortgage rates

mortgage servicing

mortgage statistics

mortgage technology

mortgage video

mortgage Webinars

net branch

net branch directory

nonprime news

origination news

originator tools

real estate news

refinance news

reverse mortgage news

secondary marketing

social media

servicing news

subprime news

wholesale lenders