Comment Detail

Comment

April 14, 2016

Alfred M. Pollard, General Counsel
Attn: Comments/RIN 2590-AA69
Federal Housing Finance Agency
400 Seventh Street SW
Eighth Floor,
Washington, D.C. 20219

Re: Notice of Proposed Rulemaking and Request for Comments: Acquired
Member Assets

Dear Mr. Pollard:
The Federal Housing Finance Agency (“FHFA”) has requested comments on its notice of
proposed rulemaking on the Acquired Member Assets (“AMA”) regulation published on
December 17, 2015. San Luis Valley Federal Bank appreciates the opportunity to comment on the proposed rule. The Mortgage Partnership Finance (MPF) Program is the component of the AMA regulation that is of greatest concern to our bank.

As a small mutual thrift located in South Central Colorado, the MPF program has provided our bank with a competitive alternative to the more common secondary market outlets for residential mortgage loans, and allows us offer our home loan borrowers better access to competitive mortgage products. The ability to offer fixed rate mortgages at nationally competitive rates, and then sell those loans while retaining the servicing for our borrowers, is critically important. We can maintain a solid customer relationship and manage our interest rate risk by not keeping long term fixed rate mortgages in our loan portfolio. The program is also critically important in providing liquidity for the bank when loan demand is strong and our source of funds become limited.

The mortgage business has become more complicated since the 2008-09 financial crises as a result of regulatory changes required by Dodd-Frank. The ability to work with a partner like the FHLB of Topeka, who provides outstanding guidance in working with the MPF program, is invaluable to our bank. They understand some of the challenges of lending in rural communities and they offer simplified, commonsense recommendations when working with our borrowers. In conjunction with the entire FHLB system, they have developed safe yet logical underwriting guidelines. Our delinquency experience with our MPF borrowers has been extremely low, and after eight years in the program making $60.3 million in loans to 415 homeowners, we have yet to experience one foreclosure. This is a result of our bank knowing our borrowers and our market, and the FHLB’s sound underwriting requirements.

We are also very concerned about two specific proposals for change. The first is the recommendation to limit loans on manufactured housing. Of the six counties in our market area, three are among the poorest in the state of Colorado, and the other three are in the lower quartile. Manufactured housing meets a critical need for affordable housing in our market, and the ability to include loans on these properties within the MPF is extremely important for our customers.

The second area of concern is the proposal to limit or eliminate our ability to include our employees or board members as borrowers in the MPF program. Any MPF loans currently made to members of our staff or board are made under the same terms and conditions as loans made to our normal customer base. All underwriting guidelines are adhered to and pricing is the same as loans made to the general public. Given the small, rural nature of our community, our employees and board members should have the same access to competitively priced mortgage products as the rest of our customers.

Given how fast the mortgage business is changing, we need every available tool to remain competitive and serve our community. We believe having an MPF program that remains competitive with commonsense underwriting guidelines, backed by professional service from FHLB staff, is critical to our ongoing success. We again appreciate the opportunity to comment on the proposed rule making and hope you will take our concerns into consideration when issuing the final rules.

Sincerely,

Duane N. Bussey, President/CEO