Boston FHLBank Loses Key Loan Source

The Federal Home Loan Bank of Boston has disclosed that its largest source of mortgage loans, Balboa Reinsurance Co. (a Countrywide subsidiary), stopped selling loans to the FHLBank in April."Management cannot predict the extent to which Balboa Reinsurance Co. may sell loans to the bank in the future," the Boston FHLBank says in its third-quarter financial report. Nearly 70% of the Boston FHLBank's $4.6 billion mortgage portfolio came from Balboa, a subsidiary of Countrywide Financial Corp., Calabasas, Calif. The Boston bank's loan purchases totaled $39.2 million in the third quarter, compared with $1.2 billion in the same period last year. With the loss of its major customer, the Boston bank's mortgage portfolio is shrinking as principal repayments outpace loan purchases. But the FHLBank still reported strong earnings. Net income totaled $50.3 million in the third quarter, a 62.6% increase from that of a year earlier. The FHLBank can be found online at http://www.fhlbboston.com.