The Council of Federal Home Loan Banks has submitted a letter to FHFA that offers a roadmap for FHFA to implement the provisions of an executive order regarding FHLBanks.
The letter was in response to the Trump administration’s recent executive order on promoting access to mortgage credit.
The letter reflects extensive input and consultation with FHLBank members, and it emphasizes the FHLBanks’ long-standing role as a reliable source of liquidity for more than 6,300 member institutions, particularly community banks and credit unions that serve as primary mortgage lenders in rural, small-town, and underserved communities.
“We view the Executive Order as an important opportunity to expand access to sustainable mortgage credit, support community-based lenders, and strengthen the resilience of the housing finance system, while maintaining the safety and soundness that has characterized the FHLBanks’ 90-plus-year history, and we look forward to working with you,” the letter read.
FHLBank said its liquidity has demonstrably supported significant increases in mortgage and community lending over time, and that the letter underscores FHLBanks’ readiness to do even more in a supportive regulatory environment.
“The FHLBanks are well positioned to support the achievement of both objectives by expanding upon the core functions they already perform effectively: providing fully secured, through-the-cycle liquidity to their members. Recent independent research confirms that FHLBank advances are strongly associated with increased lending by member institutions, including an estimated $850 billion in additional residential real estate lending between 2002 and 2024, and that advances support bank stability, and reduce potential losses to the Deposit Insurance Fund,” the letter stated.
Letter Offers Key Recommendations
Key recommendations focus on four core areas:
- Modernizing regulations to better align with how members deliver mortgage credit today, including updates to long-term advance structures and mortgage purchase programs
- Targeting liquidity and housing resources toward entry-level homeownership, small builders, and owner-occupied housing
- Enhancing coordination with the Federal Reserve to improve liquidity access and system resilience, particularly in times of market stress
- Streamlining outdated requirements that add cost and complexity without advancing the FHLBanks’ mission
FHLBanks noted that the letter also highlights the need to reduce cumulative regulatory burden and encourages FHFA to use the Executive Order to recalibrate supervisory practices and to reaffirm that major policy changes will be implemented through a notice-and-comment period or clearly identified written guidance.
Overall, FHLBanks stated that the letter frames the executive order as a meaningful opportunity to expand access to sustainable mortgage credit, empower community-based lenders, and improve the efficiency of the housing finance system.
