MReport Jan 2019

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TH E M R EP O RT | 59 O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT LOCAL EDITION GOVERNMENT Counting Collaterals The Federal Home Loan Banks hold $3 trillion in collateral, according to FHFA. T he total value of col- lateral held by the Federal Home Loan Banks (FHLBanks) rose 7.6 percent from $2.8 trillion at the end of 2016 to $3 trillion by the end of 2017 according to the latest report on collateral pledged to FHLBanks released by the Federal Housing Finance Agency (FHFA). The report provides an over- view and analysis of FHLBanks' collateral by composition, collateral type, and other relevant categories and reports collateral data for both the entire FHLBank System as well as the individual banks. According to the FHFA, FHLBank members are allowed to pledge various types of collateral to secure advances and other bank products. Overall, FHFA found that collateral with the FHLBanks in 2017 consisted of nine types of collateral. They included: • Single-family 1-4 unit residential first liens • Agency MBS/CMOs • All other authorized securities • Multifamily first and second liens • Other real estate related collateral (ORERC) such as commercial real estate first and second liens • ORERC: home equity loans and lines of credit, first and second liens • ORERC: other loans • community financial institution (CFI) collateral The report indicated that single- family collateral remained the largest single collateral category at the end of 2017 and accounted for an estimated 53 percent of all eli- gible collateral that was pledged to FHLBanks during the year. Single- family collaterals increased by $134 billion or 9 percent between the end of 2016 and the end of 2017. Looking at the distribution of collateral by type and bank, the report said that single-family collat- eral was the largest category across all banks. Dallas was the only FHLBank that reported having more eligible commercial real estate collateral pledged ($98 billion) than single-family collateral ($88 billion). "Commercial real estate was the second-largest collateral category at seven FHLBanks, multifamily was the second-largest category at two FHLBanks, and CFI collateral was the second-largest category at the Topeka Bank," the report said. Four FHLBanks–Atlanta, Boston, Cincinnati, and New York–report- ed having no eligible CFI collateral pledged by their members. Under the member lien and pledge status, the FHFA report indicated that members pledging collateral under blanket lien ar- rangements continued to account for the largest dollar amount of eligible collateral at $1.6 trillion or 53 percent of eligible collateral. A Reprieve for Homebuyers With Student Loans A RECENTLY PROPOSED BILL IN OHIO IS LIKELY TO HELP MORE AMERICANS ACHIEVE THEIR DREAM OF HOMEOWNERSHIP. OHIO // Ohio Senate Bill 334, which was introduced in November, is likely to help around 400 low- to middle-income families afford housing by canceling out much of their student loan costs, according to Ameritech Financial. These provisions in the bill are also aimed at encouraging college, and vocational school graduates stay in the state. "Too many Ohioans who are saddled with student loan debt aren't buying homes, and that is hurting their future financial prospects, contributing to brain drain, and stifling our housing market," said Sen. Joe Schiavoni, who introduced the bill. "The plan will incentivize new graduates to stay here in Ohio and will stabilize neighborhoods at the same time." According to a statement by Schiavoni, homebuyers would be eligible to have 20 percent of the home's cost forgiven at closing, and as long as they made their mortgage payments on time, homeowners would no longer be required to pay on their student loans. However, if the homebuyer's debt exceeded 20 percent of the home's cost, they would be required to pay the remaining debt at closing. "Senate Bill 334 is based on the Maryland SmartBuy pro- gram, which started in 2016 and has already eliminated $1 million in student debt," Schiavoni's statement said. "After its initial success, the Maryland legislature recently expanded the program, making available an additional $3 million for new homebuyers." Homebuyers would have to live in the purchased home for five years for them to be able to get the full benefit of this Bill, according to Ameritech Financial. "But for locals struggling with long-term living situation choices, this could be a huge boon. Even better, it would also work with the first-time buyer programs currently available in Ohio, as well." According to the Federal Reserve Bank of New York's Quarterly Report on Household Debt and Credit, U.S. student loan debt increased by $37 billion in Q 3, up to a total of $1.44 trillion total as of September 30. A recent LendingTree analysis found that the median debt balance for millennials living in the 50 biggest U.S. cities is $23,064. $23,064 The median debt balance for millennials living in the 50 biggest U.S. cities according to a recent LendingTree analysis

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