Federal Home Loan Banks Support Streamlining of Affordable Housing Program Regulations
16 Agosto 2024 - 11:35AM
The Federal Home Loan Bank System (FHLBank System), has filed
a comment letter in response to the Federal Housing
Finance Agency (FHFA) Request for Input on the Affordable
Housing Program (AHP) application process.
The comment letter expresses support for FHFA’s
goal of simplifying the AHP application process, while also
asserting that a more meaningful and effective approach to
enhancing the program’s impact would be for the agency to revise
the overall regulatory framework governing AHP to allow this
crucial element of grant funding to efficiently, consistently, and
effectively help ease affordable housing challenges.
The comment letter also encourages FHFA to be
mindful of the role the FHLBanks play – through their members – as
“gap” funders rather than lead lenders in affordable housing
projects. In this capacity, AHP occupies a complementary role in
the affordable housing market and the FHLBanks are not positioned
to influence major project changes such as funding or reserves.
AHP funding stems from the statutorily required 10
percent of the previous year’s net earnings that each FHLBank must
contribute to the program and often represents the final piece of
the funding stack for a given project. Last year, the 11 FHLBanks
voluntarily agreed to contribute 15 percent of net earnings to
affordable housing and community development programs on a
go-forward basis, and in recent years the FHLBanks have encouraged
FHFA to address the overly burdensome regulatory requirements that
prevent the majority of FHLBank members, particularly smaller
community financial institutions, from accessing AHP funds.
Ryan Donovan, president and chief executive officer
of the Council of Federal Home Loan Banks, the public voice of the
FHLBank System, noted that easing the AHP application burden
addresses only one part of the problem.
“AHP funding has an undeniably positive impact for
families, small businesses, and communities across the country, as
can be seen in our recently published 2023 Impact Report, and
the FHLBanks anticipate they will contribute approximately $1
billion to affordable housing and community development initiatives
this year,” said Donovan. “Yet, too many smaller financial
institutions and less sophisticated affordable housing and
community groups are effectively excluded from participating in AHP
because of overly burdensome regulations. It is not just the
application process, but also the complicated regulations relating
to the funding and monitoring processes that stand in the way of
greater participation among FHLBank members. We strongly encourage
FHFA to go beyond the application process and widen its focus to
address the limitations inherent in the broad AHP regulatory
scheme. We are eager to collaborate with FHFA on this
initiative.”
The comment letter notes that AHP is currently
subject to 13 FHFA regulations and five Advisory Bulletins, and
that supervisory oversight further complicates the ability of
FHLBank members to access and use AHP funding.
Click here to read the letter.
About: The FHLBanks are 11
regionally based, wholesale suppliers of lendable funds to
financial institutions of all sizes and many types, including
community banks, credit unions, commercial and savings banks,
insurance companies, and community development financial
institutions. The FHLBanks are cooperatively owned by member
financial institutions in all 50 states and U.S. territories. The
steady supply of lendable funds from FHLBanks helps U.S. lenders
invest in local needs including housing, jobs, and economic
growth. The Council of FHLBanks represents all 11
FHLBanks.
CONTACT INFORMATIONCouncil of
FHLBanksPeter E. Garuccio202-955-0002 ext.
14pgaruccio@cfhlb.org