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FHFA Drops Optimistic 2016 Report to Congress

The Federal Housing Finance Agency released recently its exhaustive annual 2016 Report to Congress, where it highlights actions it has taken over the year to support and maintain the nation’s housing industry.

The 120 page report covers, amongst others: a report of the annual examination of Fannie Mae and Freddie Mac (The Enterprises), reports of annual examinations of the Federal Home Loan Banks, the results of stress tests under the Dodd-Frank Wall Street Reform Consumer Protection Act, enterprise housing goals and duty to serve, the federal home loan bank mission and affordable housing programs, and offers regulatory guidance. You can find some of the report’s highlights below.

Annual Examination of The Enterprises

In 2016 Fannie Mae reported an net income of $12.3 billion and an annual comprehensive income of $11.7 billion, compared to a net income of $11.0 billion and a comprehensive income of $5.8 billion in 2015. 

Freddie Mac also showed similar year-over-year growth, with an annual net income of $7.8 billion and a comprehensive income of $7.1 billion. In 2015 the lender reported a net income of $6.4 billion and a comprehensive income of $5.8 billion. The report also found that the Enterprises earned more of their income from guarantee fees than from interest.

Annual Examination of Federal Home Loan Banks (FHLBanks)

FHLBanks saw impressive growth in 2016 that was bolstered by increases in advances to members. The year closed with a net income of $3.4 billion and total assets increased by $88.8 billion—9.2 percent—to $1.06 trillion. Aggregate assets were their highest since 2009.

FHLBanks reside in Boston, New York, Pittsburg, Atlanta, Cincinnati, Indianapolis, Chicago, Des Moines, Dallas, Topeka, and San Fransisco.

Results of Stress Tests

Fannie Mae, in its Severely Adverse scenario, predicted draws from the Treasury Department between $22.8 billion and $73.0 billion depending on deferred tax assets. By year end of 2015 Fannie Mae drew $116.1 billion from the Treasury, with about that much of remaining funding commitment.

Freddie Mac predicted draws between $26.4 billion and $52.8 billion, depending. Year end 2015, they had drawn from the Treasury Department $71.3 billion.

Finally, all of the FHLBanks were found to be compliant with regulatory capital and leverage capital requirements for the entirety of the nine-month stress test. All 11 banks did predict a negative net income under the Severely Adverse scenario.

You can find the entire report here

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