EWSFLASH l JANUARY 2016 l NMP NEWSFLASH l JANUARY 2016 l NMP NEWSF FHFA Updates FHLBank Membership Rules
JANUARY 2016 n National Mortgage Professional Magazine n
The Federal Housing Finance Agency (FHFA) has released a final rule amending its regulation on Federal Home Loan Bank (FHLBank) membership by financial institutions. The updated rule follows more than 1,300 comment letters received by the regulator after it issued a proposed rule in 2014. The final rule does not include provisions from the 2014 proposed rule requiring financial institutions to retain FHLBank membership by maintaining ongoing minimum levels of investment in specified residential mortgage assets. “The statutory requirements for members to continue their commitment to housing finance can be addressed by monitoring the levels of residential mortgage assets they hold and we, therefore, decided not to include the ongoing investment requirements in the final rule,” said FHFA Director Melvin L. Watt. But the new rule features a provision that redefines “insurance company” that excludes captive insurance companies. The FHFA argued that captive insurers primarily focus on underwriting insurance for its parent company or for other affiliates, instead of the general public. Rather than immediately ban captive insurers from membership, the new rule allows FHLBank captive insurer members that joined before the new rule takes effect to terminate their membership within the next five years. In making this announcement, Watt added that Congress has the authority to amend the Federal Home Loan Bank Act to allow captive insurers the right to become FHLBank members again. “The MBA is disappointed, to say the least, in the final rule on FHLBank membership,” said David H. Stevens, CMB, president and CEO of the Mortgage Bankers Association (MBA). “When Congress established the FHLBank membership framework, it didn’t limit membership to only certain insurance companies. Today, without
direction from Congress, FHFA decided to narrow membership and exclude important members of the system.” Rob Nichols, president and CEO of the American Bankers Association (ABA), countered the sentiments of Stevens and the MBA. “We’re pleased that FHFA listened to the more than 1,300 comment letters from ABA, state associations and banks opposing this provision. There was no demonstrable need for the proposed changes, which contradicted congressional intent and would have harmed the FHLBs, their member banks and the communities they serve,” said Nichols in a statement. “In today’s marketplace, we need a FHLB system that serves the wide variety of lending institutions active in today’s housing finance market, including captive insurance companies, REITs, independent mortgage bankers, and other entities, all of which provide major sources of liquidity and are core components in the 21st century FHLBank system,” said Stevens. “We will continue to work with Congress on this issue to address the shortcomings of today’s rule.”
Guardian Mortgage Launches Community Outreach Program
Guardian Mortgage Company has announced the launch of its “Community Involvement” program, an outreach effort designed to get its teams involved in the local communities they serve. According to Guardian’s CEO and President Russ Anderson, the new program will “facilitate and implement ideas that
give Guardian colleagues a chance to ‘pay it forward’ in their local communities.” The program, which is completely voluntary with all Guardian Mortgage locations participating. Currently, Guardian has offices in Plano, Richardson, Arlington and El Paso, Texas; Grand Blanc, Mich.; Scottsdale, Ariz.; and Santa Fe and Albuquerque, N.M. For their inaugural projects, all locations will do something to fight hunger in their communities. Some of the charities they’ll be working with include the North Texas Food Bank, Feed My Starving Children, The Food Depot and El Pasoans Fighting Hunger. Following these initial efforts, each office will choose a new project on a quarterly basis. “Guardian is more than its colleagues, but part of a much larger community,” Anderson said. “We recognize the importance of the unique towns and cities that surround our individual offices, and we want to be an avenue by which each of us participates in the betterment of the overall environment.” Leading the Community Involvement program is Anisa Johnson, vice president of marketing and communications for Guardian. She was chosen by the company’s senior leadership to spearhead the program for the first year. Her term will end Sept. 30, 2016, when a new leader is selected to take the reins. “Our Community Involvement program is going to be a game-changer,” Johnson said. “We’ve always provided great services to our customers, but now, we can expand that service to others within the community as well. I hope our work will truly make an impact on our communities and those who need it.”
Goldman Sachs in $5.1B MBS Settlement Goldman Sachs Group Inc. has announced that it will pay $5.1 billion in fines and penalties as part of a settlement involving its underwriting and
sale of problematic mortgage-backed securities (MBS) between 2005 and 2007. The settlement will resolve the ongoing investigation of the New Yorkbased firm by Residential MortgageBacked Securities Working Group of the U.S. Financial Fraud Enforcement Task Force and will also resolve claims brought by the U.S. Department of Justice, the National Credit Union Administration, the Federal Home Loan Banks of Chicago and Seattle, and the New York and Illinois Attorneys General. Under the terms of the agreement in principle, Goldman Sachs will pay a $2.385 billion civil monetary penalty, make $875 million in cash payments and provide $1.8 billion in consumer relief initiatives including principal forgiveness for underwater homeowners and distressed borrowers and creation and preservation of affordable housing. Goldman Sachs, which made no admission of wrongdoing in its settlement announcement, stated that this agreement will result in reduced earnings of approximately $1.5 billion on an after-tax basis for the fourth quarter of 2015. “We are pleased to have reached an agreement in principle to resolve these matters,” said Lloyd C. Blankfein, chairman and CEO of The Goldman Sachs Group Inc.
Trade Groups Balk at FHFA Borrower Survey A coalition of financial services trade associations sent a joint letter to the Federal Housing Finance Agency (FHFA) expressing concern over its proposed survey to borrowers that will collect data for the upcoming National Mortgage Database project. The survey, which mortgage borrowers will be able to fill out on a voluntary basis, is designed to have up to 85 questions regarding their home loan experience. This new survey will replace the current FHFA National Survey of Mortgage Borrowers.