FHFA Seeks Input on FHLBank System Mission

The Federal Housing Finance Agency (FHFA) has issued a Request for Input (RFI) on the mission of the Federal Home Loan Bank (FHLBank) System as the Agency considers next steps for related rulemakings.

The RFI provides an opportunity for the public to provide feedback on a core recommendation of FHFA’s Federal Home Loan Bank System at 100: Focusing on the Future report. Recognizing the importance of government-sponsored enterprises (GSEs) serving a clear public purpose, the report recommends clarifying the mission of the FHLBank System, and updating how the Agency evaluates the FHLBanks’ achievement of that mission.

“The mission of the FHLBanks to provide liquidity and support housing and community development should be clearly articulated and reflect their role in the housing finance system,” said FHFA Director Sandra L. Thompson. “FHFA welcomes the public’s input on how best to achieve this clarity of purpose for the FHLBank System in future rulemakings.”

As FHFA considers potential rulemakings to strengthen the connection of the FHLBanks to their public purposes, the Agency is requesting input from the public on three categories of questions:

  • Updating the regulatory statement of the FHLBank System’s mission to better reflect its appropriate role in the housing finance system.
  • Developing metrics and thresholds to evaluate mission achievement.
  • Identifying how the FHLBanks could incorporate incentives for members with a strong and demonstrable connection to the FHLBank System’s mission.

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.

“We look forward to working with FHFA to demonstrate how FHLBanks and our members help achieve the mission that Congress has established for us: to provide reliable liquidity to members to support housing finance and community development, provide grant funding to support affordable housing, and to promote financial stability,” said Ryan Donovan, President and CEO of the Council of Federal Home Loan Banks, the public voice of the Federal Home Loan Bank System (FHLBank System). “The FHLBanks have clearly met these mission objectives throughout their history and continue to fulfill them today. The value FHLBank liquidity holds for members through all economic conditions is indisputable, and the FHLBank System is one of the largest sources of private funding for affordable housing in the country.”

Each FHLBank is required by law to contribute a minimum of 10% of income to its Affordable Housing Program (AHP). Last year, the 11 FHLBanks voluntarily agreed to contribute a total of 15% of income to affordable housing and community development initiatives on a go forward basis. Each FHLBank is either already making additional voluntary contributions or is in the process of increasing its voluntary contribution levels. The FHLBank System recently reported combined net income of over $6.6 billion for 2023, with a combined AHP assessment of $752 million. Including expected voluntary contributions based on their 2023 financial results, the FHLBanks expect to provide approximately $1 billion in support for affordable housing and community development initiatives in 2024.

The FHFA invites interested parties to provide written input, feedback, and information on all aspects of this RFI by July 15, 2024. Comments may be submitted via FHFA’s website (select “FHLBank Mission” from the menu), or mailed to the Federal Housing Finance Agency, Division of Bank Regulation, 400 7th Street, S.W., Washington, DC 20219.

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Eric C. Peck

MortgagePoint Managing Digital Editor Eric C. Peck has 25-plus years’ experience covering the mortgage industry. He graduated from the New York Institute of Technology, where he received his B.A. in Communication Arts/Media. After graduating, he began his professional career in New York City with Videography Magazine before landing in the mortgage finance space. Peck has edited three published books, and has served as Copy Editor for Entrepreneur.com.
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