FHFA Seeks Input to Address Affordable Housing Shortage

The Federal Housing Finance Agency (FHFA) has issued a Request for Input (RFI) on opportunities to improve the Federal Home Loan Banks’ (FHLBanks) processes for members and project sponsors to apply for Affordable Housing Program (AHP) funding.

“FHFA’s efforts to streamline the AHP application process should improve the FHLBanks’ ability to provide much needed funding for addressing the shortage of affordable housing,” said FHFA Director Sandra L. Thompson. “Today’s RFI seeks feedback from the public as FHFA develops proposals to make AHP funding more accessible to nonprofits, community organizations, and tribal entities.”

For more than three decades, AHP has played an important role in the FHLBanks’ support for their members’ efforts to address affordable housing needs in their communities by awarding nearly $8 billion in grants to assist the financing of more than one million single-family and rental housing units. AHP grants have been particularly effective in leveraging additional public and private resources for funding affordable housing projects that present underwriting challenges, such as projects for homeless households and special needs populations.

A history of the AHP

Each year since 1990, the FHLBanks have set aside 10% of their private earnings to support the creation and preservation of housing for lower income families and individuals through the AHP. Grant funds from the AHP are awarded to members of the FHLBank System, who submit applications on behalf of project sponsors who are planning to purchase, rehabilitate, or construct affordable homes or apartments. These funds are awarded through a competitive process, which typically takes place either once or twice a year, at the FHLBank’s discretion.

AHP funds can be used for the acquisition, construction, or rehabilitation of:

  • Rental housing: In which at least 20% of the project’s occupants must earn 50% or less of the area median income.
  • Owner-occupied housing: In which households earn 80% or less of the area median income (AMI).
  • Additional eligible projects may include: One- to four-unit houses; co-ops; condos; apartments; single-room occupancy facilities; long-term shelters; transitional housing; mutual housing associations; and group homes.

FHLBank System celebrates a milestone

The FHLBank System was created by the Federal Home Loan Bank Act of 1932 as a government-sponsored enterprise (GSE) to support mortgage lending and community investment.

During FHFA’s FHLBank System at 100: Focusing on the Future review, many stakeholders encouraged FHFA to improve the efficiency of the application process. FHFA is seeking input on potential opportunities to improve the application process for the AHP competitive application programs.

As the FHLBanks approach their centennial, FHFA conducted a review to ensure they remain positioned to meet the needs of today and tomorrow. As part of the review process, FHFA hosted two public listening sessions and a series of regional roundtable discussions to consider and evaluate the mission, membership eligibility requirements, and operational efficiencies of the FHLBanks. FHFA invited input from stakeholders on the FHLBanks’ role or potential role in addressing housing finance, community and economic development, affordability, and other related issues.

Each FHLBank develops user or reference guides and resources to assist FHLBank members and project sponsors apply for AHP competitive application funding. FHFA is providing these resources to assist stakeholders in providing feedback on the FHLBanks’ AHP competitive applications.

FHFA invites interested parties to provide written input, feedback, and information on all aspects of the RFI, no later than August 19, 2024. Public input may be submitted electronically using the response form at FHFA’s website by clicking here, or via mail to the Federal Housing Finance Agency, Division of Housing Mission & Goals, 400 7th Street SW, 9th Floor, Washington, D.C. 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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