SEATTLE – The Federal Home Loan Bank of Seattle yesterday reported a $161.6 million loss for 2009, as its mortgage-backed securities investments continued to crater.
The loss was attributed primarily to $311.2 million of credit-related charges associated with expected losses on certain of its investments in private-label mortgage-backed securities that have been classified as other-than-temporarily impaired, the Seattle Bank said.
The 2009 loss follows a loss of $199.4 million for 2008 for the Seattle FHLB.
Increasing mortgage delinquencies and foreclosures, particularly over the past two years, have adversely impacted the mortgages underlying the Seattle Bank’s private-label MBS. The credit-related charges on these securities are based on the securities’ expected performance over their contractual terms to maturity, which currently average approximately 19 years. Through Dec. 31, 2009, the Seattle Bank had received all cash flows due reflecting, among other things, its senior credit position and significant credit enhancements on these investments.
"Increases in expected losses on our MBS investments moderated somewhat in the fourth quarter of 2009, but deterioration in the housing market beyond our current projections could further impact our business at least through 2010," said Richard Riccobono, president of the Seattle Bank. "Although this is a difficult time for the Seattle Bank cooperative, as well as for our members and the communities they serve, we remain well positioned to meet their liquidity and funding needs, just as we have throughout the economic challenges of the past several years."
