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1. This booklet is a disclosure material prepared based on the “Law Concerning Access to Information Held by Incorporated Administrative Agencies.” (Law No. 140 of 2001).
2. Figures in this booklet(1) Rounding of figures Amounts are rounded to the nearest unit. Percentages (%) are rounded off at the second decimal point in principle. Thus,
a figure in the total section may not equal the sum of the itemized amounts.(2)Indication method Items with values less than the unit are indicated as “0” while items with no
statistical figures are indicated as “—.”3. Information on Japan Housing Finance Agency (JHF), including that on this
booklet, is available on JHF’s website (https://www.jhf.go.jp).4. Fiscal year (FY) begins in April and ends in March, therefore, financial results
of FY are figures as of March end.5. If there is any material difference between Japanese original version and this
English translation, the Japanese original version shall prevail.
Disclosure Booklet2019
2019DisclosureJuly 2019
Issued by:Japan Housing Finance AgencyPublic Relations Group, Corporate Strategy Department 1-4-10 Koraku, Bunkyo-ku, Tokyo, Japan 112-8570TEL: +81-(0)3-5800-8019https://www.jhf.go.jp
This booklet is printed on 70% post-consumer recycled paper with vegetable oil ink.
2 Disclosure Bookle 2019
About JHF
Business Overview JHFfocusesonsecuritizationsupportbusiness,abusinesstosupportoriginationoffixed-ratehousingloansbypri-vatefinancialinstitutions,butalsoconductshousingloaninsurancebusinesstopromotesmoothoriginationofhousingloansbyprivatefinancialinstitutions,andloanoriginationbusinessinareasimportantfromthepolicyperspective,yetdifficultforprivatefinancialinstitutionstoenter. JHFstrivestoupgradethehousinglifestandardsandservesitscorporatesocialresponsibility(CSR)bysmoothandefficientoriginationofhousingloansrequiredtoconstructhouses,thefoundationsofhousinglifeofthecustomers.
❶ Securitization support business (“Flat 35”)
Supportoriginationoffullyfixed-ratehousingloansofprivatefinancialinstitutionsbythefollowingprograms:• Flat35(PurchaseProgram):JHFpurchasesfullyfixed-ratehousingloansfromprivatefinancialinstitutionsandse-curitizesthem.
• Flat35(GuaranteeProgram):Privatefinancialinstitutionssecuritizefullyfixed-ratehousingloansinsuredbyJHF,andJHFguaranteesinterestandprincipalpaymenttoinvestors.
❷ Housing loan insurance business
Supportsmoothoriginationofhousingloansofprivatefinancialinstitutionsbyestablishingaframeworktopayinsur-ancemoniestoprivatefinancialinstitutionspursuanttopreviouslyconcludedinsurancepolicythatcovershousingloanlossesduetounexpectedevents.
❸ Loan origination business (Policy-related loans including loans for disaster recovery and urban development loans)
ByprovidingdirectloansfromJHF,JHFsupports:housing-reconstructioninareasaffectedbytheGreatEastJapanEarthquakeandothernaturaldisasters,thebusinessthatfacilitatestherenewalofurbanfunctionsandimprovesdi-saster-resilienceincludingurbanredevelopmentprojectsandrebuildingofcondominiumsandimplementingworkforearthquake-resistantimprovement,andpromotionofrentalhousingsupplytocontributetostablelivingforchild-rear-inghouseholdsandtheelderlies.
❹ Promotion of quality housing
PromoteinstallmentofqualityhousingbyrequiringthehouseeligibleforFlat35andJHFloanstofulfilthetechnicalstandards.�
❺ Group credit life insurance business
ProvidesecurityforborrowersofFlat35(PurchaseProgram)andJHForiginatedloansbyapplyinginsurancemoneypayablefromthelifeinsurancecompanyincaseofborrower’sdeathordisabilityandrepaytheremainingamountofhousingloanoftheborrower.
❻ Management of outstanding loans
Conductappropriatemanagementofoutstandingloansbycarefullyrespondingtoloanrepaymentmodificationforborrowersfacingdifficultiesinpayingbacktheirhousingloan,andbyreductionofdelinquentloans.
❼ International business
Implementresearch,study,andthedisseminationofinformationpursuanttotheActonPromotingEntryofJapaneseBusinessOperatorsintoOverseasSocialcapitalprojects(ActNo.40of2018).
❽ Survey operation concerning domestic housing finance
Conductresearchandsurveysondomestichousingfinancemarkets.
❾ Financing
FinancingmainlythroughtheissuanceofMortgage-backedSecurities(MBSs)andStraightBonds(SBs).
3Disclosure Booklet 2019
Corporate Governance
Activities of JHF
Activities of JHFAbout JHF
Providing Fixed-rate Housing Loans through Collaboration with Private Financial Institutions
Business Overview
Providing Fixed-rate Housing Loans through Collaboration with Private Financial Institutions
Security of by fixing the interest rate until the maturity
“Flat35”isafixedinterestratemortgagethatJHFofferstopeopleincollaborationwithprivatefinancialinstitutions.Becauseafixedinterestratemortgageisatypeofloanhavingtheborrowingrateandtheamountofinstallmentsfixeduntilthematurityassoonastheloanisclosed,whichenablescustomerstomakelongtermplansforliving.
“Flat 35”
① Security of fixed interest rate until the maturity ② Support building of secure housing by offering a variety of options.
④ Extend consultation during the repayment period③ Neither a co-signer nor fee for prepayment is needed
Four meritsof “Flat 35”
Approximately one-third of prospective loan-applicants desire fixed interest rate housing laon.
Adjustable interest rate
29.5％
Hybrid adjustable interest rate
35.1％Fixed
interest rate
35.4％(Source) JHF “The second survey of borrowers of private-sector housing loans in FY 2018 targeting prospective loan-applicants (conducted in April2019)”
Interest rate type desired by prospective loan-applicants
Customer①Applying for Flat 35
②Disbursement of Flat 35
⑧Repayment
③Assigning housing loans
⑨Delivery of cash collected
⑤ Collateral for MBS
⑩Pass-through payment of principal & interest to MBS investors
④Entrust housing loan as collateral
Applying for inspection of construction
Issuing conformity certificats
⑥ Proceed of MBS
⑤Issuing mortgage-backed securities (MBS)
⑦Reimbursement for purchased housing loans
Investors
Inspection institutions
Financial institutions
Trust banks, etc.
Scheme of Purchase Program
0
5,000
10,000
15,000
20,000
25,000
FY2017 FY2018FY2016FY2015FY20140.8
1.0
1.2
1.4
1.6
1.8
2.0
2.2
2.4
2.6
2.8
3.0
｝
Unit: houses
1.37
1.47
8,072
9,819
13,578 14,172
7,084
12,168
9,743
5,844
1.541.48
1.25
0.90
1.08
1.36
1.12
10,781
9,846
11,179
9,750
11,207
5,916
1.75
7,302
5,286
10,410
9,0889,205
10,618
1.45
1.27
“Immediate Economic Measures for Extending Virtuous Cycles to Local Economies” Eligible for loans distributed after for Feb. 9, 2015（▲0.3％→▲0.6％）
Unit: %
Overall “Flat 35”“Flat 35S”
The number of applications*1 for “Flat 35” (Left scale)
The group credit life insurance system changed since applications accepted on October 1, 2017.(Expenses necessary for enrollment in group credit life insurance are included in monthly loan payments, and coverage specifics have been enhanced)
Termination of 0.6％ interest-rate reduction at the end of Jan. 2016 (▲0.6％→▲0.3％)
The lowest interest rates of “Flat 35 (Purchase Program)” *2 (Right scale)
*1 Total number of houses applying for “Flat 35 (Purchase Program / Guaran-tee Program)”.
*2 The lowest interest rates indicated are those offered by financial institutions and applicable to loans having tenors between 21 years and 35 years. Inter-est rates vary according to loan-to-val-ue ratio (90% or lower, or over 90%) for loans since February 2014, therefore indicated are interest rates of loan-to-value ratio 90% or lower. In addition, as interest rates differ depending on the type of group credit life insurance, indi-cated are interest rates of JHF group credit life insurance applied since Oc-tober 2017. Many financial institutions provide lower interest rate to the loans having 20 years or less tenor than those having 21-35 years.
〈Trend of applications for “Flat 35” and interest rates〉
JHFintroduced“Flat35S”,aloweredinterestrateapplied“Flat35”andappliedforacertainperiod,tocustomerspur-chasinghighqualityhousing,suchaslong-lifequalityhousing,andtocontributetoformationofhighqualityhousingstock.
Superior energy-efficient house
●Thermal insulation fully installed●Double glazed windows and other energy saving features
Increase insulation capacity of houses and reduce consumption of electricity and fossil fuels such as kerosene used in heating and cooling is necessary for conservation of the global environment.
Superior earthquake-resilient house
●Secure wall balance and placement●Enhanced wall joints●Enhanced housing foundation and others
To prepare for large-scale earthquakes by increasing earthquake-resistance capability and by ensuring the safety of housing is important.
Superior barrier-free performance featured house
●Without difference in level on the floor●Handrail installment●Enough width of passeageways
Housing livable for the elderly with preparation for home nursing care is the fundamental of future housing construction.
Superior durability and flexibility featured house
●Anti-decay and anti-termite features●Attic and under floor ventilations and others
Formation of high quality housing stock is impera-tive for Japan’ s pre-matured society. Building a long-lasting house and using it with care will lead to global environment conservation.
Promote dissemination of high quality housing, such as long-life quality housing by introducing “Flat 35S”
<Four performance features applicable for “Flat 35S”>
4 Disclosure Bookle 2019
Financial Conditions (FY2018 results)
(Units: 100 million yen)
▲1,000
0
1,000
2,000
3,000
4,000
5,000
FY2018FY2017FY2016FY2015FY2014FY2013FY2012FY2011FY2010FY2009FY2008FY2007
The second mid-term target period The third mid-termtarget periodThe first mid-term target period
▲171▲33 ▲58
338 26998
572 670 789 663 645
1,458
2,122
2,767
3,345
770
4,153
821
▲165▲28▲193 ▲251
▲509▲258
Gross income or loss (▲)
Surplus carried forward orloss carried forward (▲)
〈Status of profit and loss, etc. of Securitization Support Account〉
▲8,000
▲6,000
▲4,000
▲2,000
0
2,000
4,000
FY2018FY2017FY2016FY2015FY2014FY2013FY2012FY2011FY2010FY2009FY2008FY2007
(Units: 100 million yen)
▲1,693
▲5,284
▲97
▲5,381
▲1,445
▲6,826
▲169
▲6,994
▲6,158
▲4,499
▲2,844
1,655
837
1,659 1,760
▲1,084
222
1,211 1,045
2,478
1,074
3,551
1,4331,306
Gross income or loss (▲)
Surplus carried forward orloss carried forward (▲)
The second mid-term target period The third mid-termtarget periodThe first mid-term target period
〈Status of profit and loss, etc. of Outstanding Loans Management Account〉
▲4,000
▲2,000
0
2,000
4,000
6,000
8,000
10,000
12,000
FY2018FY2017FY2016FY2015FY2014FY2013FY2012FY2011FY2010FY2009FY2008FY2007
(Units: 100 million yen)
▲1,569▲1,414
▲146
▲1,777▲1,468
▲3,310
▲366
▲3,720▲2,496
▲792
1,576
2,4592,092
1,323
2,824
4,313
2,159 2,025 1,962 2,044
9,739
11,747
8,314
6,385
Gross income or loss (▲)
Surplus carried forward or loss carried forward (▲)
Securitization SupportAccount 82.1 billion yen
Outstanding LoanManagement Account107.4 billion yen
＊As a result of distributions from the reserve fund (retained earnings) for the previous mid-term target period, JHF paid 30.9 billion yen for FY2012 and 44.7 billion yen for FY2017 to the National Treasury.
The second mid-term target periodThe third mid-term
target periodThe first mid-term target period
〈Whole JHF’s profit and loss etc.〉
Status of profit and loss
〈Securitization Support Account〉 JHFpostedgross incomeof82.1billionyen intheSecuritizationSupportAccounttoscoreagainof 5.2 billion yen from the previous fiscal year,thankstoanincreaseinthebalanceofpurchasedloans, appropriate loan management and otherfactors. Asexpensestendtoberealizedlaterthanearn-ings due to credit risk, etc. of the SecuritizationSupportBusiness(PurchaseProgram),thelossinthelatterhalfwillbeoffsetbyprofitinthefirsthalfof the loan period, therefore, in order to prepareagainst futureemergenceofcredit risk,etc., JHFhascarriedovertheentireamountofgrossincomeasreservefunds(Article44,paragraph1oftheActonGeneral Rules for Incorporated AdministrativeAgencies).
〈Outstanding Loans Management Account/＊〉 JHFpostedgrossincomeof107.4billionyenin theOutstandingLoanManagementAccountforanincreaseof2.8billionyenfromtheprevi-ousfiscalyear,thankstoappropriateloanman-agementandotherfactors,whichtogetheroffsetadeclineinoutstandinglending. Fromtheperspectiveofconcludingthebusi-nesssmoothlywithoutincurringnewliabilitiestoNationalTreasury,andtoprepare against future emergenceofcredit risk,etc., JHFhascarriedforwardtheentireamountofsurplusasreserves(Article7,paragraph7ofsupplementaryprovi-sions of Act on the Japan Housing FinanceAgency,IndependentAdministrativeAgency).
〈Housing Loan Insurance Account〉 JHF logged gross profit of 7.1 billion yen, adecreaseof0.4billionyenyear-on-year,andre-tainedearningsof15.9billionyen.
〈Property Accumulation Housing Fund Loan Account〉 JHFregisteredgrossprofitof0.6billionyen,adropof0.6billionyenyear-on-year,asinthepre-vious year, and retained earnings of 37 billionyen.
〈Housing Loan Fund, etc. Account〉 JHFposted gross profit of 7.2 billion yen, againof0.5billionyenyear-on-year,andretainedearningsof351.4billionyen,includingreserveof297.3billionyen for thegroupcredit life insur-ancebusiness.
Meanwhile, the above-mentioned five ac-countsofJHFasawholepostedgrossprofit of 204.4billionyen.
* Since the Outstanding Loans Management Account is the account that manages the loans originated by the former Government Hous-ing Loan Corporation before FY2004, therefore, the outstanding loan amount will continue decreasing as no new loans will be origi-nated.
Financial highlights, points in performance results
5Disclosure Booklet 2019
About JHFCorporate G
overnanceActivities of JHF
Financial highlights, points in performance results
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
FY2018FY2017FY2016FY2015FY2014FY2013FY2012FY2011FY2010FY2009FY2008FY2007
(Units: 100 million yen)
Loans (Outstanding Loan Management Account)
Loans (Other than Outstanding Loan Management Account)
Purchased loans
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
FY2018FY2017FY2016FY2015FY2014FY2013FY2012FY2011FY2010FY2009FY2008FY2007
(Units: 100 million yen)
378,949
421,602
27,817
14,836
332,983
15,792
32,863
381,638
283,175
16,963
40,540
340,678
236,456
17,017
64,372
317,846
197,020
16,535
86,099
299,654
165,135
15,579
99,827
280,541
139,345
109,818
14,845
264,009
118,144
116,394
14,260
248,797 242,245
100,018
13,903
128,323 136,616
13,271
83,459
233,346
147,979
13,640
71,084
232,702
159,061
14,649
60,741
234,451
Borrowings from FILPOther bonds, etc.SBMBS
2,595
27,879
68,013
324,619
423,106
4,969
25,862
76,114
281,931
388,876
7,229
25,880
84,194
245,561
362,864
11,251
18,539
90,301
214,204
334,295
15,271 16,226
101,237
175,225
307,959
20,162 14,265
105,895
152,646
292,968
21,921 12,758
108,974
131,109
274,763
22,211 11,732
110,462
109,885
254,290243,675
89,178
11,891 25,588
117,018 121,244
28,644 12,390
71,185
233,462
127,420
32,14213,247
56,290
135,990
36,243
14,151
42,273
229,099 228,657
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
FY2018FY2017FY2016FY2015FY2014FY2013FY2012FY2011FY2010FY2009FY2008FY2007
(Units: 100 million yen)
Loans (Outstanding Loan Management Account)
Loans (Other than Outstanding Loan Management Account)
Purchased loans
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
FY2018FY2017FY2016FY2015FY2014FY2013FY2012FY2011FY2010FY2009FY2008FY2007
(Units: 100 million yen)
378,949
421,602
27,817
14,836
332,983
15,792
32,863
381,638
283,175
16,963
40,540
340,678
236,456
17,017
64,372
317,846
197,020
16,535
86,099
299,654
165,135
15,579
99,827
280,541
139,345
109,818
14,845
264,009
118,144
116,394
14,260
248,797 242,245
100,018
13,903
128,323 136,616
13,271
83,459
233,346
147,979
13,640
71,084
232,702
159,061
14,649
60,741
234,451
Borrowings from FILPOther bonds, etc.SBMBS
2,595
27,879
68,013
324,619
423,106
4,969
25,862
76,114
281,931
388,876
7,229
25,880
84,194
245,561
362,864
11,251
18,539
90,301
214,204
334,295
15,271 16,226
101,237
175,225
307,959
20,162 14,265
105,895
152,646
292,968
21,921 12,758
108,974
131,109
274,763
22,211 11,732
110,462
109,885
254,290243,675
89,178
11,891 25,588
117,018 121,244
28,644 12,390
71,185
233,462
127,420
32,14213,247
56,290
135,990
36,243
14,151
42,273
229,099 228,657
〈Outstanding balance of purchased loans and other loans〉
〈Outstanding balance of bonds and borrowings〉
Status of assets and debts
Total assets as of end of FY2018amounted approximately 26 trillion yen,andtotaldebtsamountedapproximately24trillionyen.Statusofmajorassetsanddebtsisasfollows.
Status of outstanding balance of purchased loans and other loans
The outstanding balance of “Flat 35(purchasedloans)”attheendofFY2018wasabout16trillionyen.Thebalanceofpurchased loans has been increasingyear after year and now accounts foraround70%oftheoutstandinghousingloansheldbyJHF.
Status of outstanding balance of bonds and borrowings
Fundraisingfromthefinancialmarketsby issuing mortgage-backed securities(MBS) or straight bond (SB) has in-creasedduetobusinessgrowthof“Flat35 (purchased loans).”Meanwhile, bor-rowingsfromFiscalInvestmentandLoanProgram (FILP), which are borrowingsfromtheJapanesegovernment,havede-clinedduetothedecreaseinthebalancein the Outstanding Loans ManagementAccount.
cf. Credit risk profi t loss structure (image)
Asexpensestendtobereal-ized later thanearningsdue tocreditriskandinterestratefluc-tuationriskassociatedwiththeSecuritizationSupportBusiness,etc.,thelossinthelatlerhalfwillbeoffsetbyprofitinthefirsthalfoftheloanperiod.
3533312927252321191715131197531
(Profit and loss)
Single year deficit
(Elapsed years)
Earnings
Expenses
Single year profit and loss
Cumulative profit and loss
Single year profit
Single year profit and loss
Area of profit and area of loss becomes equal
6 Disclosure Bookle 2019
Corporate Governance
Governance Structure
Business Management Deliberative Council TheBusinessManagementDeliberativeCouncilwasestablishedtoconductreviewbyexternalexpertsregardingthevalidityofthebusinessmanagementandbyaneutralpositioninaccordancewiththeBasicPolicyonReformofIncor-poratedAdministrativeAgencies(CabinetdecisiononDecember24,2013). SinceitsfirstmeetingheldinMay2014,theCouncilhasmadetoJHFsuggestionsthatwouldleadtotheimprovementoftheproductfeaturesofJHFloansandoperationsofitsbusiness.TheCouncilissuedareportcompilingthesugges-tionsinMarch2018.JHFwouldliketheCounciltocontinuedeliberatingontheappropriatenessofitsbusinessopera-tionsandwilltakeintoaccounttheresultsofthedeliberationsforitsfuturebusinessoperations.
〈Business Management Deliberative Council Members〉As of July 1st, 2019
○Kazuhito Ikeo Professor of Economics and Finance, Faculty of Economics, Rissho University
Sayuri KawamuraChief Economist, Economic Department, The Japan Research Institute,
Limited.
Toru Kurahashi Professor, Faculty of Economics, Dokkyo University
◎Takaaki Wakasugi
Professor Emeritus, The University of Tokyo
Co-director, Mitsui Life Financial Research Center, Ross School of Business,
The University of Michigan
Kuniaki Watanabe Founder & CEO, Winworks K.K.
(◎: Chairman, ○: Deputy Chairman) (Honorific titles omitted)
JHF
Review of evaluation results
Evaluation/Business Improvement order
Commission
Expression of opinions
Appointment Inspection Selection
Inspection
Financial audit
Inspection
Delegation
Business ManagementDeliberative Council
Minister of Land, Infrastructure,Transport and Tourism and Minister of Finance
Committee on the System of Evaluating Incorporated Administrative Agencies
Accounting auditors
Board of Auditof Japan
Financial ServicesAgency
President Auditor Generals
etc.Credit Risk Management Committee Information Security CommitteeALM Risk Management Committee CS CommitteeBusiness Management Committee
Board of Directors (Overall risk management) Compliance Committee
Audit Internal AuditingDepartment
Audit
Auditor Generals
JHF’s Corporate Governance
JHF’s internal governance system
RecognizingitsbasicmissionandsocialresponsibilityasanIncorporatedAdministrativeAgency,JHFacknowledgesstrengtheningofcorporategovernanceisanimportantbusinessissue,therefore,activelyimplementsactivitiestoensuresoundandproperconductofitsbusinesswithhighethicalstandardsandwisdomundertransparentandefficientman-agementbasedontheActonGeneralRulesforIncorporatedAdministrativeAgency. Moreover, inorder todevelop its internalgovernancesystemtoassureappropriatebusinessoperations,JHFhasestablishedtheBasicPolicyonInternalGovernanceandpromotesappropriateinternalgovernancebythePDCAcycleaswellasfurthersophisticationofinternalgovernancebyenhancingthegovernanceenvironment.
事業運営審議委員会報告書 ■はじめ
【第１部 融資の商品性や業務運営の見直しに繋がった提言】 【民業補完の取組】 提言１ フラット35保証型の推進 ○委員からの提言も踏まえた機構の取組 ○機構の取組に対しての委員会評価
提言２ 民間の融資との役割分担の仕組み（ルール）づくり○委員からの提言も踏まえた機構の取組 ○機構の取組に対しての委員会評価
【政策実施機能としての取組】 提言３ 住宅金融市場における先導的な取組の実施○委員からの提言も踏まえた機構の取組 ○機構の取組に対しての委員会評価
提言４ コンパクトシティ化の促進○委員からの提言も踏まえた機構の取組 ○機構の取組に対しての委員会評価
提言５ 既存住宅市場の活性化等○委員からの提言も踏まえた機構の取組 ○機構の取組に対しての委員会評価
目 次
【内部統制等の取組】 提言６ トップからのメッセージの継続的な発信○委員からの提言も踏まえた機構の取組 ○機構の取組に対しての委員会評価
提言７ 職員のモチベーション向上 ○委員からの提言も踏まえた機構の取組○機構の取組に対しての委員会評価
提言８ 情報公開への取組○委員からの提言も踏まえた機構の取組 ○機構の取組に対しての委員会評価
【第２部 今後の事業運営に関する課題】
課題１ 証券化市場の育成
課題２ 地域連携の取組について
課題３ 既存住宅市場の活性化等
課題４ 業態を超えたアライアンス
課題５ 職員のモチベーション向上
参考資料：第１回から第８回までの事業運営審議委員会について
7Disclosure Booklet 2019
About JHFActivities of JHF
Corporate Governance
ComplianceBusiness Management Deliberative CouncilGovernance Structure
Compliance
JHF distributed a pocket-size edition of compliance manual to all of the executives and employees, which serves as a guide to reconsider the activity of JHF business and to make decision in diffi cult times.
Report
Consultation/Report
Consultation/Report
Instruction
Check/Instruction
Report the consulted and informed matters
Check/Instruction
Department and offices
Officer to promote Compliance activities (assigned in each department)
Compliance committee (chairperson: President)
Legal Affairs and Compliance DepartmentIn-house and
external contacts
Conformity of compliance
Conformity of compliance
Inordertofulfillthecompliancerequirementswithoutfail,JHFestablishedtheComplianceCommitteechairedbyitspresidentandcomprisingalloftheexecutivesanddirectorsoftherelevantdepartments.Itstaskistodiscussandde-cideonmattersincludingpoliciesrelatedtocomplianceissues.Inaddition,JHFestablishedtheComplianceandLegalDepartment as the head departmentmanaging compliance and assigned officers to promote compliance activitieswithineachdepartment. Furthermore,inordertopreventcomplianceviolationswithinJHF,anin-housecontact(ComplianceHelpLine)andexternalcontactforexternalpersonswereestablished.
Compliance activities
JHFhasestablishedtheComplianceCharterasitsbasicprinciplesofcomplianceandissuedacompliancemanualthatstipulatesthelawsandregulations,rules,socialrequirements,andbusinessrelatedandconcernedmatterstocon-form,whichhasbeennotifiedtoalloftheexecutivesandemployees. Everyyear,JHFstipulatesandexecutestheComplianceProgramasanactiveplanforourcompliance. ConcreteactivitiesundertheComplianceProgramincludee-learningavailabletoalloftheexecutivesandemployees,compliancemeetingconductedbyeachbusinessunits(asmallgroupcasemethoddiscussionwillbeconducted),andcompliance-related informationsharingbyusingthe internalLAN,whicharededicatedtoenhance individualunder-standingofcomplianceandpromoteselfawarenessandactionbythemselves. Inaddition,JHFhassteadilypromotedcomplianceactivitiesconductingthePDCAcycleinaformofquarterlymoni-toringoftheComplianceProgrambytheComplianceCommitteeandmodificationsofComplianceProgrampolicies,ifnecessary.
The Compliance Charter (excerpts)
1. We comply with laws, rules and regulations as well as so-cial norms, and strive to undertake all tasks properly in ef-forts to ensure public confi dence.
(1) Compliance with laws and regulations as well as so-cial norms
(2) Proactive and fair disclosure of information (3) Strict information management (4) Resistance against all anti-social parties 2. We thoroughly strive to pursue customer confi dence and
satisfaction.
(1) Provide comprehensive housing loan services (2) Conduct appropriate and suffi cient explanations (3) Respond sincerely to customer voices 3. We respect the personality of each executive and employ-
ee and endeavor to secure a pleasant working environ-ment.
(1) Respect the personality and character of individuals (2) pleasant working environment
8 Disclosure Bookle 2019
Responses to Anti-social Forces Torejectanyrelationshipwithanti-social forcessuchasorganizedcrimesyndicates,JHFhasexplicitlystatedtheresistanceagainstallanti-socialpartiesinitscompliancecharterandestablishedtheBasicPolicyAgainstAnti-socialForces,whichisavailableonourwebsite.Inaddition,regulationsandmanualsfordealingwithsuchanti-socialforceshavebeenprepared.Throughtheseefforts,JHFhasestablishedaframeworkforreportingtoandconsultingimmediate-lyandproperlywithmanagementandtheLegalAffairsandComplianceDepartment,thedepartmentthatoverseesre-sponsestoanti-socialforces,incaseJHFidentifiesbusinessrelatedwithsuchanti-socialforcesorundueclaimfromsuchforces. JHFalsoconductstrainingandothersessionstoaddressundueclaimsincooperationwiththepoliceandotherrele-vantinstitutions. JHFstipulatesarticleonrejectionofanti-socialforcesinitsbusinesscontractsandeliminatesanyrelationshipnotonlywithorganizedcrimesyndicatesbutalsowithindividualscoexistingwithanti-socialforcestryingtoillegallyreceiveloansforthebenefitofanti-socialforcesrelatedwithorganizedcrimesyndicates. Asanorganization,JHFwillcontinueitscommitmenttowardsrejectingrelationshipwithanti-socialforces.
Information SecurityJHFhasbeendedicatedtoconductinginformationsecuritymeasures.InFY2018,JHFenhancedtheframeworktopromoteinformationsecuritymeasuresasfollows:・ JHFestablishedinformationsecuritymeasuresinaccordancewith“FY2018CommonStandardsforInformationSe-
curityMeasuresforGovernmentAgenciesandRelatedAgencies”establishedbyNISC(NationalCenterofIncidentReadinessandStrategyforCyber-security).
・ JHFimplementedinformationsecuritymeasurespursuanttoFY2018InformationSecurityMeasuresPromotionPlananddefinedFY2019InformationsecurityMeasuresPromotionPlantocontinueitseffortoninformationsecuritymea-sures.
・ JHFconductstraininganddrillstopromoteandmaintainliteracyofJHF’smanagersandemployeesoninformationsecuritymeasuresbutalsorevisethepracticepursuanttoselfassessmentandotherresults.
Basic Policy against Anti-social Forces
1. JHF commits to have no relationship with any anti-social forces, and the President, including the management and all employ-ees shall never compromise with such forces.
2. JHF commits to establish a framework to reject anti-social forces and distribute to all of the management and employees the manual describing how to deal with such forces.
3. JHF commits to ensure the safety of management and employees who deal with undue claims from anti-social forces. 4. JHF commits to cooperate closely with external institutions, such as the police, National Center for Removal of Criminal Or-
ganizations, and lawyers. 5. JHF commits to take both civil and criminal law related actions against undue claims from anti-social forces.6. JHF commits to never conduct “backstage deals” to conceal facts that undue claims from anti-social forces were made to JHF
due to misconduct of JHF’s business activities or its employees. 7. JHF commits to never provide funds to anti-social forces.
9Disclosure Booklet 2019
About JHFActivities of JHF
Corporate Governance
Risk Management Information SecurityResponses to Anti-social Forces
Risk Management
Risk management framework
JHFclassifiesrisksascreditrisk,guaranteerisk,insurancerisk,marketrisk,counterpartycredibilityrisk,liquidityrisk,andoperationalrisk.Intheeventofasignificantchangeineconomicsituation,JHFwillcorrespondinglyspecifythenewrisktobemanaged. JHFsustainstheframeworktoproperlymanagetheserisksinqualitativeandquantitativeaspectsbyappointinganexecutiveandadepartmentresponsibleformanagingeachrisks.Inparticular,the“CreditRiskManagementCommit-tee”wasestablishedtomanagecreditrisk,guaranteerisk,andinsurancerisk,andthe“ALMRiskManagementCom-mittee”wasestablishedtomanagemarketrisk,counterpartycredibilityrisk,andliquidityrisk.Thesecommitteesmoni-torthestatusofeachriskanddiscusstheriskarrangementplanningandproposals. Inaddition,JHFassignsanexecutiveandadepartmentresponsibleforcomprehensiveriskmanagementtoconductcomprehensiveriskmanagementoneachriskandmaintainstheframeworktotrackandevaluatethequantifiedresultandthemanagementstatusofeachriskandperiodicallyreporttheresultstotheBoardofDirectors.
InordertomaintainthehealthinessofJHF’sbusinessandgainunderstandingandtrustofthegeneralpublic,JHFsustainsanorganizationalstructuretoproperlymanagethevariousrisksassociatedwithitsday-to-dayoperations. Tobespecific,JHFhasestablishedriskmanagementregulations,suchas“RiskManagementBasicRules”thatstip-ulatethepurposeofriskmanagement,characteristicsanddefinitions ofindividualrisks,andmethodsandauditingofthestatusofriskmanagementimplementationandalso“CreditRiskManagementRules”thatstipulatesspecificriskmanagementmethodofindividualrisks.Basedontheserules,JHFimplementsriskmanagementincorporatingfeaturesofbusinesses,suchashousingloansandothers,andconductscomprehensiveriskmanagementbyunderstandingandvaluingtheindividualrisksasawholeconsideringJHF’sbusinessandcharacteristics.
Audit
Audit
President
Board of Directors (Comprehensive risk management)
Credit Risk ManagementCommittee
ALM Risk ManagementCommittee
監 事
AuditorGenerals
Internal AuditDepartment
Comprehensiverisk management
Risk category Responsible departments
Operational risk
Administrative risk
System risk
Legal risk
Human risk
Tangible asset risk
RiskManagementDepartment
Credit riskGuarantee risk
Insurance underwriting risk
Market riskCounterparty credibility risk
Liquidity risk
Risk Management DepartmentCredit Policy Department
Loan Administration Department
Risk Management Department
Department of CS and AdministrationBusiness Administration Department
Information Systems DepartmentLegal Affairs &
Compliance Department
General Affairs andPersonnel Department
Corporate Strategy DepartmentReputation risk
Risk Control Department
Risk management framework
10 Disclosure Bookle 2019
Risk categories
Credit risk CreditriskisdefinedastheriskofJHFsufferingfroma lossdue todeclineordisappearanceof asset valuecaused by deterioration of the creditworthiness of adebtor, which JHF holds as a loan receivable. SincehousingloansconstitutesmajorportionofJHF’sassets,JHFendeavorstoproperlyunderwritethecreditriskofthe loans JHF purchases or originates, and properlymanageandperformself-assessmentoftheloansthatJHFholds,andtrack,analyze,andmanagetheoverallcreditrisk.
Underwriting of purchasing and originated loans JHFdefinescriteriaandmethodsofunderwritingandproperly underwrites the credit risk of purchasing andoriginatedloans.
Self- assessment JHFproperlymanagesthecreditriskofretainedloanclaimsandconductsself-assessmentaccordingtoJHFdefinedself-assessmentcriteriacomplyingwiththe“Fi-nancial Inspection Manual” of the Financial ServiceAgency inorder toproperlydisclosefinancial informa-tionpursuanttothe“AccountingStandardsforIncorpo-ratedAdministrativeAgencies.”Tobespecific,JHFcal-culatesthenecessaryreservesfornon-performingloansbyclassifyingJHF’sassets inaccordancewiththeun-collectibility and loss severity and thenmultiplying theexpected loss given default ratio calculated based onhistoricalperformanceofnon-performingloans.
Credit portfolio management Usingthecreditportfoliomanagementsystemforpe-riodicalmonitoring,JHFanalyzestheutilizationstatusofhousingloans,forecastsfuturelosses,andreviewsthenecessary credit risk premium in order to accuratelyevaluatetheoverallcreditriskofallthedebtsthatJHFholdsand the locationof risks.JHFalsoendeavors tofurtherimproveriskquantificationbyutilizingthecreditportfoliomanagement system to strengthencredit riskmanagement.
Guarantee risk GuaranteeriskisdefinedasriskofJHFsufferingfromalossduetoopposedfluctuationofaguaranteeincidentagainsttheestimatemadeatthetimeoftheguaranteefeecalculation.JHFguaranteesmortgage-backedsecu-rities (MBS) under the securitization support business(guaranteeprogram).JHFperformsproperunderwritingandendeavorstotrack,analyze,andmanagetheoverallguaranteerisk.
Insurance underwriting risk Insurance underwriting risk is defined as the risk ofJHFsufferingfromalossduetoopposedfluctuationofaninsuranceincidentagainsttheestimatesmadeatthetimeof the insurancepremiumcalculation.JHFunder-writesinsurancefornon-performinghousingloansorigi-nated by private financial institutions. JHF performsproper underwriting and endeavors to track, analyze,andmanagetheoverallinsuranceriskbymonitoringuti-lizing the credit portfolio management system and byverifyingwhethertheunusedpolicyreserveissufficientbyconductingfuturecashflowanalysis.
Market risk Marketriskisdefinedastheriskoffluctuationofperi-odicincomeandlossduetochangesintheriskfactors,suchastheinterestratesandothers.SincehousingloanconstitutesmajorportionofJHF’sasset,marketriskin-cludes prepayment risk, refinancing and reinvestmentrisks,andpipelineriskandothers.
Prepayment risk Prepaymentriskisdefinedastheriskofdeteriorationofperiodicincomeandlossduetolossofexpectedin-terestincomecausedbyanincreaseintheloanprepay-mentamounttriggeredbyadeclineintheinterestrate.JHF manages the risk by estimating the prepaymentamountusingtheprepaymentmodelandbysecuritizingthehousingloansandbyissuingbondsofvariousma-turities.
Refi nancing and reinvestment risks Refinancingandreinvestmentrisksaredefinedastheriskfordeteriorationofperiodicincomeandlossduetoincreasedinterestpaymentcausedbyincreasedfundingcostorduetodecreasedinterestincomecausedbyde-creasedinterestoninvestmentunderthecircumstancesofrefinancingorreinvestment.JHFmanagestheriskbyutilizingtheinterestmodeltoestimatethecashflowofassetsanddebtsincorporatingfutureinterestratefluc-tuationsandforecastingperiodicalincomeandlossac-cordingtosuchcashflow,andbyperiodicallymonitor-ingtheriskindexes,suchasdurationandothers.
Pipeline risk Pipelineriskisdefinedastheriskoffluctuationofpe-riodicincomeandlossduetofluctuationofinterestratebetweensettlementofhousingloaninterestrateandde-termination of funding interest rate applicable to suchhousingloan.JHFmanagestheriskbyconductinginter-estrateswapsforhedgingpurpose.
11Disclosure Booklet 2019
About JHFActivities of JHF
Corporate Governance
Risk Management
Counterparty credibility risk Counterparty credibility risk isdefinedas the riskofJHFsuffering froma lossdue todeclineordisappear-anceofassetvaluescausedbyfinancialdeteriorationofbondissuerswhichJHFinvestsitssurplusfundsandofJHF’sinterestrateswaptransactioncounterparties.JHFdefines the counterparty credibility risk managementmethodsofbondissuersandinterestrateswaptransac-tioncounterpartiesandconductsmonitoring.
Liquidity risk Liquidity risk isdefinedas the riskof JHF forced tofundraisenecessarymoniesatcostsignificantlyhigherthannormalorJHFfallsintocashshortagebyfinancialdeteriorationandincurlossesundersuchsituations:ortheriskoftransactionunavailabilityinthemarketduetomarketturmoilortheriskofJHFforcedtoconducttrans-actionatadversepriceandincurlossesundersuchsit-uations. JHF sets theminimum retained amount of li-quidity assets as a management standard and as ameasure against liquidity risk,which JHF conforms tomaintain in daily operations, therefore, JHF conductsstablecashmanagementoperations.Inaddition,emer-gencycreditlineissettoachievesecuredfundingsourceandJHFsets liquiditymanagementclassifications (de-finedasnormal,cautious,andcrisissituations)accord-ingtotheurgencyoffundingneedsandsetsactionsofJHFundercautiousandcrisissituations.”Furthermore,JHFsustainsanorganizationalstructureanddefinesanactionplansocalledcontingencyfundingplantoenablepromptresponsewhenliquidityriskbecomeseminent.
Operational risk OperationalriskisdefinedastheriskofJHFsufferingfromalossduetoimproperoperationalprocesses,im-proper behavior of executives and employees, or im-properoperationofinformationsystems,oranexternalevent.Theriskincludesadministrativerisk,systemrisk,legalrisk,humanrisk,tangibleassetrisk,andreputationrisk. JHF is improving the organizational structure tomanagetheoperationalriskbytrackingtheoccurrenceof evident risks by collecting information, by definingmeasuresbasedoncausalityanalysis,byself-analyzingtheinternalriskofoperationsandthecontrolmethodofconstraining,andbyimplementingRCSA(Risk&ControlSelf-Assessment) to improve operations based on theresultsofselfanalysis.Thefollowingarethedefinitionsandcontrolmethodsofmainoperationalrisks.
Administrative risk AdministrativeriskisdefinedastheriskofJHFsuffer-
ing froma lossdue to inaccurateadministrationwork,accident, ormisconduct andothers by the executivesandemployees(includingothersexcludingJHF’sexecu-tivesandemployeesengagedinJHF’soperations),orbymisconductof thosenotengaged inJHF’soperations.JHFendeavorstoreduceadministrativeriskbyprepar-ingadministrationworkmanuals,byimprovingadminis-trativework,bycompletingcrosscheckingbetweenem-ployees, by providing instructions and training onadministrative work, by performing internal self-checkups,andbycollectingandanalyzinginformationonad-ministrative errors and taking preventive measuresagainstrecurrence.
System risk SystemriskisdefinedastheriskofJHFsufferingfroma lossdue to failure,malfunction,defect,ormisuseofinformationsystems.JHFendeavors to reducesystemriskbytakingmeasuresbasedonclassificationsaccord-ing to importanceand riskassessment,bydevelopingsystemswith functionalities, reliability, and informationsecurityconsidered,andbycollectingandanalyzingin-formationonsystemfailuresandtakingpreventivemea-suresagainstrecurrence.Inpreparationforseriousfail-ures, JHF prepared crisis management manual andendeavorstomaintainstableoperationsbytakingnec-essarymeasures,suchasduplexingsystems,establish-ingbackupcenters,andconductingemergencydrills.
Legal risk LegalriskisdefinedastheriskofJHFsufferingfromalossduetounlawfulacts,inappropriatecontracts,orun-certainty in legal matters related to business transac-tions.JHFendeavorstoreducelegalriskbyconductinglegalcheckofLegalAffairs&ComplianceDepartmentperformsbeforeestablishinginternalregulations,creat-ing contracts, and posting advertisements. JHF alsopreventsviolationsoflawsandregulationsbycollectinginformationonnewlegislation,amendmentsandothers,andbusinessrelatedlegalprecedents.
Others As ameasure for comprehensive riskmanagement,JHFconducts simulationof life-time future income formid-to-longterm. Basedoncashflowincorporatingfutureinterestratesfluctuation,thecross-sectionalrisksimulationcalculateswhetherlossesresultingfrombothcreditriskandmarketriskarecoveredbyinterestincome. Thesimulationalsoperformsstresstestsonthetworisksandscenarioanalysesbasedonbusinessvolumechangetoverifyfinancialresilience.
1. This booklet is a disclosure material prepared based on the “Law Concerning Access to Information Held by Incorporated Administrative Agencies.” (Law No. 140 of 2001).
2. Figures in this booklet(1) Rounding of figures Amounts are rounded to the nearest unit. Percentages (%) are rounded off at the second decimal point in principle. Thus,
a figure in the total section may not equal the sum of the itemized amounts.(2)Indication method Items with values less than the unit are indicated as “0” while items with no
statistical figures are indicated as “—.”3. Information on Japan Housing Finance Agency (JHF), including that on this
booklet, is available on JHF’s website (https://www.jhf.go.jp).4. Fiscal year (FY) begins in April and ends in March, therefore, financial results
of FY are figures as of March end.5. If there is any material difference between Japanese original version and this
English translation, the Japanese original version shall prevail.
Disclosure Booklet2019
July 2019
Issued by:Japan Housing Finance AgencyPublic Relations Group, Corporate Strategy Department 1-4-10 Koraku, Bunkyo-ku, Tokyo, Japan 112-8570TEL: +81-(0)3-5800-8019https://www.jhf.go.jp
This booklet is printed on 70% post-consumer recycled paper with vegetable oil ink.
