BOSTON – The Federal Home Loan Bank of Boston filed a complaint this week against securities dealers related to investments in residential mortgage-backed securities, the Boston Business Journal reported on Thursday.
The bank, which advances money to member banks and credit unions to fund residential mortgage loans, is looking to rescind the purchase of 115 securities that the bank originally paid about $5.8 billion.
Heavy losses in its mortgage-backed securities portfolio forced the FHLB of Boston to suspend its dividend to member banks. The bank’s leadership also changed as confidence in the institution’s direction faded.
FHLB of Boston’s private label mortgage-backed securities portfolio had a par value of $6 billion at the end of 2007, which shrank to $2.9 billion at the end of March.
However, the bank, which released its first quarter results on Thursday, said it continued its recovery; FHLB of Boston reported net income rose by $200,000 to $23.1 million and declared a “modest” dividend, the BBJ said.
