FHLB Holding More Mortgages

As of Sept. 30, the government-sponsored enterprise (GSE) reported holding $47.1 billion in mortgage loans, compared with $27.7 billion at the end of last year and $22.6 billion at Sept. 30 of last year, the news wire said.

Twelve regional banks comprise the FHLB system. Like Fannie Mae and Freddie Mac, the FHLB system is a government-sponsored enterprise charged with providing affordable housing.

But unlike Fannie and Freddie, banks that want to sell loans to a regional FHLB must buy stock in that FHLB bank. The owners of the FHLB are the banks, which then are usually owned by shareholders.

The bank also announced $215.5 billion in investments as of Sept. 30, a 13.3% increase from 2001’s year-end total of $190.2 billion. As of Sept. 30, 2002, aggregate mortgage-backed securities investments totaled $95.5 billion, the newswire reported.

FHLB investments include mortgage-backed securities, overnight and term federal funds sold, commercial paper, agency securities, and U.S. government securities, the news wire reported.

System members include commercial banks, savings institutions, credit unions, and insurance companies. Each member belongs to one of 12 regional FHLBs.

In the past, the bank mainly made low-cost loans to mortgage lending institutions, the news wire reported. However, it’s been acquiring mortgages through purchase programs in recent years.

The chief funding source for the bank’s operations is the issuance of consolidated debt obligations, bonds, and discount notes, the news wire said.