The Federal Home Loan Bank of Boston has reported unaudited annual net loss of $73.2 million, a $271.4 million decrease from a net income of $198.2 million in 2007.

The loss is primarily attributable to a $339.1 million charge related to "the other-than-temporary impairment of certain private-label mortgage-backed securities (MBS) as of Dec. 31. At the time of purchase, these credit-enhanced MBS investments were rated triple-A and broadly considered sound. However, the unprecedented nationwide deterioration of home prices combined with the ongoing recession has resulted in a sharp increase in loss rates on the loans underlying these securities," the company said.

FHLB has taken a number of steps to strengthen its position in the short term and preserve its capital, it said. The board of directors voted to suspend dividends for the quarter. Dividend payments in 2009 are also unlikely, the company said.

In addition, the moratorium on excess stock repurchases declared in December will continue. Also, as a result of the loss, the company will not make a contribution to the Affordable Housing Program (AHP) and Equity Builder Program for 2009, both of which are funded directly from prior year net profits.