The Federal Home Loan Banks’ (FHLBanks) affordable housing and community development support grew significantly last year, as earnings improvement across the FHLBank System corresponded with greater commitments to lower-income communities, according to a new Federal Housing Finance Agency (FHFA) report, “2023 FHLBank Targeted Mission Activities Report.”
The Report highlights the FHLBanks’ performance and activities under the Affordable Housing Program (AHP), the Community Investment Program (CIP), the Community Investment Cash Advance Program (CICA), and additional voluntary targeted mission-activity programs. “2023 FHLBank Targeted Mission Activities Report” also measures the growth in FHLBank membership and advances among non-depository Community Development Financial Institutions (CDFI), as well as the FHLBanks’ progress in meeting the affordable housing goals for mortgage purchases under the Acquired Member Assets (AMA) program.
The Federal Home Loan Bank Act (Bank Act) requires each FHLBank to establish an AHP. Under the program, members may apply to the FHLBank for AHP funds, which are provided to approved projects and households for the purchase, construction, or rehabilitation of owner-occupied and affordable rental housing. AHP funds may be in the form of grants or reduced interest rates on advances (subsidized advances) from an FHLBank to the member. A family’s household income must be at or below 80% of area median income (AMI) to be eligible for funding through AHP’s owner-occupied housing programs. For AHP-assisted rental housing to be eligible for funding, at least 20% of the project’s units must be affordable for and occupied by households with incomes at or below 50% of the AMI.
“The Federal Home Loan Banks assisted close to 65,000 low- or moderate-income households and supported more than 400 targeted economic development projects in 2023 through grants and advances,” said FHFA Director Sandra L. Thompson. “I am encouraged to see the Federal Home Loan Banks pursue creative and innovative approaches to addressing local housing needs through the voluntary programs they undertake in addition to meeting their obligations under the Affordable Housing Program.”
Funds awarded through the AHP rose by approximately $180 million in 2023. Combined advances under the CIP and CICA programs, issued to members to finance affordable housing and economic development projects in lower-income communities, grew by 44%.
The increased support for affordable housing and community development initiatives came as FHLBank earnings have recovered in the last few years. The FHLBanks are statutorily mandated to commit 10% of net income for the prior year to the AHP, which totaled approximately $355.2 million in 2023. Their actual AHP awards in 2023 were approximately $91.7 million—or about 26%—above that amount. FHLBank contributions to the AHP rose for the first time since 2018.
Key takeaways from the report include:
- The FHLBanks approved approximately $446.9 million in total contributions to the AHP, assisting more than 33,000 low- or moderate-income households, more than 17,000 of which were very low-income households. This funding represented a 67% increase from 2022.
- The FHLBanks assisted another approximately 32,000 low- or moderate-income households through the CIP and supported 399 targeted economic development projects through CICA. Overall, CIP and CICA advances totaled just over $7 billion, an increase of over $2 billion from 2022.
- One additional non-depository CDFI joined the FHLBank System, bringing the total to 71 non-depository CDFI members. That number has grown by 18 percent since 2019. Outstanding FHLBank advance balances at non-depository CDFI members were approximately $336.2 million at year-end 2023, an increase of about $63.8 million from 2022.
Providing liquidity such as advances to CDFIs is an important means by which the FHLBanks support financing of low-income housing and community development. FHFA is working with various stakeholder groups to help CDFIs—a key source of assistance for underserved communities—overcome potential difficulty accessing FHLBank membership, products, and services.
Click here to read the “2023 FHLBank Targeted Mission Activities Report” in its entirety.
