Mortgage - Home Loan, Commercial Loan

ATLANTA, Aug. 11 /PRNewswire/ — Federal Home Loan Bank of Atlanta (the Bank) today released the results for the quarter ended June 30, 2008.

2008 Second Quarter Operating Highlights

As of June 30, 2008, the Bank had total assets of $193.2 billion, an increase of $4.3 billion, or 2.28 percent, from December 31, 2007. This increase was primarily a result of increases in trading securities, held-to-maturity securities and advances, partially offset by a decrease in federal funds sold. Advances, the largest asset on the Bank’s balance sheet, increased by $2.2 billion, or 1.52 percent, during this same period.
The Bank’s net income for the second quarter of 2008 totaled $108.7 million, an increase of 16.6 percent from $93.2 million for the second quarter of 2007. The increase in net income was due to an increase in net interest income, resulting from higher average advances and mortgage-backed securities balances during the period and an increase in interest rate spread.

The 2008 second quarter performance resulted in an annualized return on equity (ROE) of 5.13 percent for the Bank as compared to the 6.05 percent for the second quarter of 2007. The ROE spread to three-month average LIBOR improved between the periods, equaling 2.38 percent for the second quarter of 2008 as compared to 0.69 percent for the second quarter of 2007.

For the three months ended June 30, 2008, the Bank distributed $114.3 million of earnings to members as a return on their capital investment in the Bank, representing an annualized dividend rate of 5.57 percent, as compared to 6.0 percent for each of the previous two quarters. The Bank’s retained earnings balance was $465.3 million as of June 30, 2008.

The Bank filed its full financial report on Form 10-Q on Monday, August 11, 2008.

On July 30, 2008, the President of the United States signed into law the Housing and Economic Recovery Act of 2008, H.R. 3221 (the “Housing Act”). The Housing Act abolishes the Federal Housing Finance Board and the Office of Federal Housing Enterprise Oversight (each, one year after the date of enactment) and establishes the Federal Housing Finance Agency as the single regulator of the Federal Home Loan Banks, Fannie Mae, and Freddie Mac.

“The Bank has performed well through its second quarter, and intends to continue as a reliable source of wholesale funding,” said Richard A. Dorfman, the Bank’s President and Chief Executive Officer. “We look forward to working closely with the newly established regulator to ensure the continued strength of the Bank.”

About the Federal Home Loan Bank of Atlanta

The Bank is a cooperative financial services organization that provides funding, community development grants, and other banking services to more than 1,200 member financial institutions in Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and the District of Columbia. The Bank is one of 12 district banks in the Federal Home Loan Bank System (the FHLB System), which since 1990 has contributed more than $2 billion to affordable housing development in the United States.

Some of the statements made in this announcement, including, without limitation, those statements that relate to the Bank’s funding plans and returns, are “forward-looking statements,” which include statements with respect to the Bank’s beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, many of which may be beyond the Bank’s control, and which may cause the Bank’s actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by the forward-looking statements.

The forward-looking statements may not be realized due to a variety of factors, including, without limitation: legislative and regulatory actions or changes; future economic and market conditions; changes in demand for advances or consolidated obligations of the Bank and/or the FHLB System; changes in interest rates; political, national and world events; and adverse developments or events affecting or involving other Federal Home Loan Banks or the FHLB System in general. Additional factors that might cause the Bank’s results to differ from these forward-looking statements are provided in detail in our filings with the Securities and Exchange Commission, which are available at www.sec.gov.

You should not place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made. The Bank has no obligation and does not undertake to publicly update, revise or correct any of the forward-looking statements after the date of this announcement, or after the respective dates on which such statements otherwise are made, whether as a result of new information, future events or otherwise, except as may be required by law.

An Albany, Mo., child care home has been awarded a low-interest loan and grant to construct a new facility.

The Missouri Child Care Resource & Referral Network said Bright Beginnings will receive the loan of up to $114,600 and a $5,000 grant through the Quality First program. Loans and grants became available in April through First Children’s Finance-Missouri, a low-interest lender for child care.

Quality First is available to licensed child care programs striving to achieve higher standards, such as accreditation. Bright Beginnings director Jennifer Akins plans to have the new center accredited, but will have to operate the facility for one year before she can apply.

The facility may open in early to mid-October. It is slated to become the first licensed child care center in Albany in the past 15 years. A waiting list has begun for 2009.

The network provides training, technical assistance and other supports to child care businesses that seek to improve quality. It is financed by federal and state funds. The YWCA of St. Joseph provides resources and referrals to families in the region.

More flood aid sought

President Bush has been asked to consider expanding a major disaster declaration to include six Northwest Missouri counties that received damage in July’s floods and severe storms.

An incident period for an earlier round of storms closed July 18. Disaster declarations are being sought for both individual and public forms of assistance.

Harrison and Livingston counties are on the request list for individual assistance. They are joined by Gentry, Grundy, Mercer and Worth counties on the public assistance list.

Ray Scherer can be reached

In an effort to help older homeowners and residents living on fixed incomes repair their homes, the city is increasing its housing rehabilitation loan program limit by $70,000

The city’s Department of Community Services has increased the maximum limit of its Housing Rehabilitation Loan program from $80,000 to $150,000.

The loans allow homeowners to make home repairs, accessibility improvements, and address health and safety issues, according to the city. Income-qualified owner-occupant applicants may obtain interest-free loans and may partially defer repayments for the 15-year term of the loan.

“We urge qualified homeowners to seriously consider tapping into this important program to ensure their homes are safe and comfortable as they grow older,” Mayor Mufi Hannemann said in a news release.

Surveys indicate that most older adults would prefer to live at home, “aging in place” as opposed to moving to an institution, according to the city.

The loans will help pay for home upgrades including installation of grab bars, widened doorways, non-skid floors and proper lighting.

Funds for the loan program are made available through the U.S. Department of Housing and Urban Development, Community Development Block Grant program.

Anyone interested in applying for or learning more about the city’s Rehabilitation Loan Program can call the Downtown office at 768-7076 or the Kapolei Hale office at 768-3240.

The Community Development Block Grant program provides communities with resources to address a wide range of community development needs, according to the U.S. Department of Housing and Urban Development.

Continuing the flow of home loans and accessing low-cost deposits are two key elements of the government’s instructions to public sector banks.

Sources said that the two issues will figure prominently during Finance Minister P Chidambaram’s meeting with the heads of 28 state-run banks on Wednesday.

While almost all public sector banks have increased the prime lending rate, they have opted to keep the interest rate on home loans up to Rs 30 lakh and education loans unchanged.

When Chidambaram meets the bank chiefs he wants a specific report on the flow of loans under these two segments along with their first quarter performance. The review of non-performing assets and other key parameters will also come up for discussion.

According to the latest Reserve Bank of India data, the growth in the overall home loan portfolio had slowed down to 13.8 per cent till May-end this year, compared to 21.6 per cent last year.

As of May 23, 2008, the total outstanding home loans were estimated at Rs 2,62,486 crore (Rs 2,624.86 billion). The year-on-year variation in the housing loan portfolio till May 23, 2008 was estimated at Rs 31,735 crore (Rs 317.35 billion), compared to Rs 41,066 crore (Rs 410.66 billion) in the corresponding period last year.

The finance ministry has asked banks to ensure that the flow of loans for the purchase of consumer goods, as also home loans, does not slow down though RBI has specifically targeted these segments in its efforts to moderate the credit growth.

Though bankers maintained that there are no instructions to push home loans, even those up to Rs 30 lakh (Rs 3 million), they have argued that the move to keep rates intact for existing customers is aimed at checking defaults.

“These loans are part of priority sector lending and borrowers in this segment need to be supported. A higher loan growth in this segment will spur consumption, which is good for the economy,” added a public sector bank chief.

While a senior State Bank of India [Get Quote] executive did not disclose the growth in the home loan portfolio during April-June he said, the bank with outstanding of Rs 46,000 crore (Rs 460 billion) in its home loan portfolio, has seen its portfolio grow across the country. In the semi-rural and rural sector alone, the home loan portfolio is close to Rs 13,000 crore (Rs 130 billion).

The other issue on the seven-point agenda for Chidambaram’s meeting is accessing low or lower cost funds. Bank of India chairman and managing director T S Narayanasami said public sector banks have not leveraged their reach. “It is time to transform the work culture, be cost effective and get more low cost resources,” he said.

Narayanasami, who is also the chairman of Indian Banks’ Association said, banks will need to raise more deposits to meet the credit expansion targets.

An SBI executive said that the use of debt cards was one way in which the bank was looking to increase the share of CASA.

The Federal Home Loan Bank of Pittsburgh said net income rose 1.7 percent to $53 million, or $1.31 a share, for the second quarter.

Results enabled the wholesale lender to set aside $5.9 million for affordable housing programs in 2009, vs. $5.8 million this year.

Total assets stood at $98.6 billion as of June 30.

The Pittsburgh bank is one of the nation’s 13 home loan banks, with 333 member institutions in Pennsylvania, Delaware and West Virginia.

MIAMI — Florida’s chief financial officer is calling for the state’s top mortgage regulator to step down after a newspaper report found that thousands of people with criminal records were allowed to work in the mortgage industry.

In addition to Don Saxon’s resignation, Florida CFO Alex Sink is also calling for an executive order to stop issuing and renewing mortgage broker licenses to convicted felons.

On Sunday, the Miami Herald reported that more than 10,000 people with criminal records were allowed to work in Florida’s mortgage industry. Of those, more than 4,000 cleared background checks despite committing crimes that state law requires regulators to screen, including fraud, rackateering and extortion.

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For more than a decade, Fannie Mae and Freddie Mac, the housing giants that make the U.S. mortgage market run, have attracted overseas investors with a simple pitch: The securities they issue are just as good as the U.S. government’s, and they usually pay better.

The marketing plan worked.

About one-fifth of securities issued by the Federal National Mortgage Association — Fannie Mae — and the Federal Home Loan Mortgage Corp. — Freddie Mac — and a handful of much smaller quasi-governmental agencies, about $1.5 trillion worth, were held by foreign investors at the end of March. One of every 10 American mortgages is, in effect, in the hands of institutions and governments outside the United States.

Now that the two companies are at risk, how their rescue is handled will ultimately test the world’s faith in American markets. It could also influence the level of interest rates and weigh on the strength of the dollar for years to come, analysts say.

“No less than the international perception of the credit quality of the U.S. government is at stake,” said Richard Hofmann, an analyst with CreditSights, an independent research house with offices in London and New York.

Also at stake is Americans’ future ability to gain access to credit. If foreign companies and governments abandon U.S. investments, home, auto and credit card loans will be much harder to come by.

That helps explain why Treasury Secretary Henry Paulson is pressing U.S. lawmakers for the authority to inject unspecified billions of dollars in cash into either Fannie Mae or Freddie Mac, or both. The “blank check” nature of his request has raised concerns on Capitol Hill, but Paulson is betting that Congress is even more fearful of the consequences of doing nothing to rescue Fannie Mae and Freddie Mac.

Asian institutions and investors hold about $800 billion in securities issued by Fannie Mae and Freddie Mac, mostly in China and Japan.

In Europe, roughly $39 billion in Fannie and Freddie debt is held in Luxembourg and $33billion more in Belgium, countries that are home to large investment management firms. Investors in Britain hold $28 billion, and Russian buyers hold $75 billion. Sovereign wealth funds in the Middle East are also believed to be big investors in Fannie and Freddie debt.

The trillions of dollars in securities issued by Fannie Mae and Freddie Mac and backed by American mortgages were never explicitly guaranteed by the U.S. government, but foreign and domestic investors alike have always believed, because of the companies’ integral role in the housing market and their marketing pitch, that the guarantee would be backed up if it were tested.

As the U.S. government’s debt, and the corresponding amount of Treasury securities, shrank in the late 1990s, foreign investors with currency reserves needed a safe alternative to park their cash. Fannie Mae and Freddie Mac stepped up their overseas marketing efforts and, with the help of Wall Street banks, sold billions of dollars in securities overseas.

Asian banks and insurers bought Fannie’s and Freddie’s paper because it gave a little more yield than a straight Treasury note — “the same risk at a better price,” said Deborah Schuler, an analyst with Moody’s Investors Service in Singapore.

Investment managers at Asian banks and governments are “very comfortable with the idea of implied government support” because it is so prevalent in Asia, she said.

Still, this week’s congressional debate on the issue “is going to worry people,” Schuler said, though she, like most analysts, is confident that Washington will deliver, just as it has in past financial crises such as the savings-and-loan industry bailout of the late 1980s and early 1990s.

Because America’s relations with a host of countries are intricately tied to Fannie Mae and Freddie Mac, the only realistic option open to lawmakers may be to hand the Treasury Department that blank check, analysts say.

The two housing agencies have always been fierce competitors, and they made no exception in their expansion into international markets. Top executives wooed governments, banks and insurance companies in Asia and Europe, and lent executives to help foreign governments, including Russia and Hong Kong, set up their own American-style mortgage markets.

Questions about Fannie Mae and Freddie Mac have prompted individual institutions and governments in Asia and Europe to specify their exposure in recent days, but so far international concern has been limited.

Ingo Buse, a spokesman for Zurich Financial Services, Switzerland’s largest insurer, said it held $8.3 billion in mortgage securities backed by Freddie Mac or Fannie Mae, and felt “comfortable with our position and asset allocation.”

Swiss Reinsurance, Switzerland’s largest reinsurer, said Wednesday that it held $9.6billion of corporate debt from Freddie Mac and Fannie Mae and $12 billion in mortgage securities backed by the two companies.

Its holding of Freddie Mac and Fannie Mae shares is minimal, it said.

Hannover Re, Germany’s second-largest reinsurer after Munich Re, said it held $199million in Freddie Mac and Fannie Mae securities. “We are not worried about the exposure,” said Stefan Schulz, a spokesman for the company, “because we expect the U.S. government to step in if there is any problem.”

Mortgage finance business is set to achieve astonishing feat in Tanzania as banks and specialised mortgage financing dealers make daring market debuts.

The latest market entry was marked last week by Tanzania Mortgage company (T-Mortgage) services, a subsidiary of T- Mortgage North America Business Development.

In May this year, Stanbic Bank launched a home loans product as well.

These developments are a direct response to the April enactment of Financial Leasing Act (2007), an important outcome of the government�s spearheaded second generation of financial sector reforms initiative.

During the launch of Tanzania Mortgage Company, Pamela Karabani, a Tanzanian living in United States and development manager of the parent company said their services would help reduce problem of decent housing deficit Tanzania.

Up to moment, she said, the housing deficit is estimated to be between 2 to 3 million units and is it increasing by the years.

Tanzania has a population of over 35 million but there are about 7 million homes only.

To address the growing housing deficit, she urged the government to collaborate with stakeholders to ensure that the mortgage industry grows at a reasonable pace, by removing all impediments which hinder the ordinary man to own a house.

In line with such concerns, incidentally raised earlier by other interested stakeholders, a draft Unit of Titles Bill, as well as a draft miscellaneous Bill to amend four laws, namely, the Land Act 1999; the Land Registration Act; the Civil Procedures Act; and the Magistrate Court Act have already been prepared.

A Mortgage Finance Bill would also be enacted this year.

Typical reform projects in second generation of financial sector reforms would involve the implementation of home mortgage finance and a secondary mortgage market.

Speaking at the same event, the T- Mortgage Chief executive officer, Prof Charles Inyangete, said over the past several years it has become apparent that home ownership in Tanzania is under-served.

He said due to various problems home ownership in Tanzania is often a difficult and lengthy process.

For that reason, he said his company would work directly with residential property developers to “ensure their customers have ability to easily get quality properties, allowing them to move in quickly, while paying for the home gradually over a period of 15 years“.

Up to the moment the company has secured more than 1,000 houses in Arusha, Mwanza and Dar es Salaam regions which would be loaned to small and medium income earners.

For his part, the Panafra (T) President Salim Zagar, said they have been impressed by the efforts the company was making to support property developers with products, processes and services which encourage and enable an increased housing inventory to be made available to a wider segment of Tanzanians.

A good number of houses built in Tanzania lack title deeds which also in turn hinder their valuation and free transfer.

This prompted launching of Property and Business Formalisation Programme (PBFP) during third phase government of President Benjamin Mkapa.

It aims at freeing and strengthening the informal sector and integrates it into the mainstream economy.

About 75 percent of the properties of about 9.2m urban dwellers in Tanzania have been neither surveyed nor formalised.

BIG banks are routing non-bank lenders in the battle for home loan market share, winning back large chunks of business once lost to their more nimble and cheaper competitors.

In a reversal of a decade, banks are now writing 17 out of every 20 new housing loans — close to 85 per cent — as their mortgage competitors struggle with the burden of higher wholesale funding costs brought on by the US economic crisis.

Aussie Home Loans, once the biggest thorn in the side of the banks, this week launched a “We’ll match you” advertising campaign to try to stem the loss of market share.

Executive chairman John Symond said 99 per cent of the 10,000 borrowers seen in the past two months were able to get a better deals.

It is estimated that non-bank lenders have seen their share of the total home loan market slashed by two-thirds in the past year as the global credit crunch hits home.

The bank winnings come amid a hike in lending rates, forced in part by rising world interest rates and the phasing out of 12-month introductory discount interest rate loans, more often called honeymoon deals.

All housing lending is off sharply, with lending commitments 13.5 per cent lower in May than a year ago — the weakest annual growth in 16 years.

Bureau of Statistics data shows that wholesale lenders, mainly in the non-bank sector, provided 4 per cent of housing finance in May, down from 13 per cent a year earlier. Banks won as much as 90 per cent of the $13.6 billion home loan market in the same month, up from 79 per cent in May 2007.

CommSec Securities calculated the bank’s shares at a record 86.6 per cent, up from 78 per cent 10 months ago, and said it was likely to grow.

Equities economist Savanth Sebastian said: “Banks continue to pick up market share, with the cost of borrowing for non-bank financial institutions still a lot more expensive when compared with the big banks.

“Over the last month, the cost of wholesale borrowing has started to blow out — trending in a manner similar to when Bear Sterns collapsed in March,” he said. “Banks are well placed to increase market share in coming months as less competitive non-bank lenders are priced out of the market.”

Other lenders to lose share are building societies, whose share of the mortgage market has almost halved to 1.5 per cent from 2.8 per cent. Credit unions were not as hard hit.

A senior analyst with financial industry research group Cannex, Harry Senlitonga, said the non-bank share of the mortgage market had fallen as higher global borrowing costs forced them to offer fewer products.

Mr Senlitonga said non-bank lenders, which were more exposed to the global credit crunch, would have to phase out discount interest rate loans.

“Many institutions say this is not sustainable in the longer term,” he said. “At the moment, it’s a tough time for them because funding costs are increasing.”

Non-bank lender Resi is offering the Low Start Loan, which charges 7.99 per cent interest for the first year of a mortgage. After that it reverts to 8.99 per cent.

Commonwealth Bank, which raised its standard variable lending rate by 14 basis points to 9.58 per cent last week, is offering a 12-month discount introductory interest rate of 8.55 per cent.

Warren O’Rourke, spokesman for loan broker Mortgage Choice, said global banks like ING and Halifax Bank of Scotland, which owned BankWest, were benefiting as the banks increased their share of the mortgage market.

Additional reporting: AAP

WARWICK – Rhode Island-based Home Loan Investment Bank recently laid off about 30 employees as the company shifts its focus from mortgages to commercial loans in the wake of major disruptions in the home loan industry.

Brian Murphy, CEO of the privately held company, this week confirmed the layoffs but insisted that Home Loan Investment Bank remains profitable. “We had to get down to the right size,” Murphy said. “We’re not sticking our head in the sand and hoping everything turns around. We’re adjusting.”

The bank – whose Web site sets the size of its local staff at more than 275 – said it continues to be a “strong, conservative and well-capitalized banking institution.”

“With over three times the capital required by its federal regulators, the bank is considered a well-capitalized institution,” Home Loan said in a statement.

The 49-year-old Home Loan Investment Bank – a federally chartered financial institution that does business in 25 states – still has six or seven employees originating mortgages, according to Murphy. But home loans have become a less significant part of the business as the mortgage industry has imploded in the past year and the housing market has cooled.

Layoffs are nothing new in the financial-services sector. One trade group said 86,000 jobs nationwide were cut in 2007 as a result of the subprime turmoil. An industry research firm had predicted another 130,000 jobs would vanish by the end of 2008.

Like many other banks and mortgage companies, Home Loan Investment Bank has instituted layoffs over the past year as the market has deteriorated industry-wide. Murphy said his company has gone from about 275 employees in 2005 to about 140 employees now.

But, he said, there won’t be any more layoffs. “We’re holding on to our core people,” he said.

In the meantime, the company’s commercial loan business – which centers on government-guaranteed loans – has picked up significantly, going from about $28 million in commercial loans in 2006 to $40 million in 2007. Murphy projects that the company will do as much as $90 million in commercial loans by year’s end.

Murphy said 85 percent of Home Loans Investment Bank’s revenue came from residential lending before the mortgage crisis – now 80 to 85 percent of its revenue is derived from commercial lending.

“The reduced headcount enables the bank to more efficiently originate mortgages during these difficult times,” the statement said, “and places the bank in an excellent position for future growth.”