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  • Comment Detail

  • Date: 06/23/20
    First Name: Garth
    Last Name: Rieman
    Email: grieman@ncsha.org
    Organization Type: other
    Organization: National Council of State Housing Agencies

  • Comment

    June 23, 2020

    Dr. Mark A. Calabria, PhD.
    Director
    Federal Housing Finance Agency
    400 7th Street SW
    Washington, DC 20219

    Attention: FHLBank Membership Request for Input

    Dear Director Calabria:

    On behalf of the state Housing Finance Agencies (HFAs) it represents, the National Council of State Housing Agencies (NCSHA) appreciates the opportunity to respond to the Federal Housing Finance Agency’s (FHFA) Request for Input on Federal Home Loan Bank (FHLBank) membership.

    NCSHA shares the FHFA’s goal of advancing the FHLBank System’s mission of providing liquidity for housing finance and furthering affordable housing and community development. For that reason, we recommend FHFA expand the FHLBanks’ ability to partner with HFAs by enhancing their membership status and privileges within the existing statutory framework.

    Pursuant to 12 CFR Part 1264, FHLBanks may certify HFAs and other entities to be housing associate members according to certain criteria and may make advances to them even though they are not traditional and full FHLBank members.

    FHFA has long recognized the important role that HFAs play in supporting affordable housing opportunities. HFAs have a strong track record of responsibly financing mortgage lending to underserved borrowers. They are state-chartered authorities established to help meet the affordable housing needs of the residents of their states. While they differ from state to state in organizational structure, resource bases, and activities, they have statewide authority to finance affordable housing and enjoy high bond ratings and strong loan performance.

    HFAs are self-supporting businesses, capitalized with bond earnings and other program administration fees. They raise capital through a variety of channels, including by issuing bonds, government programs, lines of credit, and other securities and lending programs. HFAs administer a wide range of affordable housing and community development programs, including tax-exempt Housing Bonds, the Housing Credit, down payment assistance, single-family lending, and the HOME Investment Partnerships program.

    Through their associate memberships and related activities, HFAs already partner extensively with FHLBanks by accessing advances and other borrowing, bond purchases and stand-by bond purchase agreements, letters of credit and stand-by letter of credit agreements, down payment assistance financing programs, warehouse lines of credit, providing housing finance solutions for AHP and other FHLBank members’ affordable housing developments, advance pledge and security agreements, and cash management services.

    While some FHLBanks currently enjoy productive relationships with HFAs, others have not worked effectively with HFAs. Many HFAs would like to significantly expand their work with FHLBanks, but current limitations prevent them from doing so.

    These barriers prevent state HFAs from accessing a valuable source of funding for their affordable housing programs and deny FHLBanks fruitful opportunities to partner with proven entities that can extend their reach and be strong allies in their efforts to address unmet affordable housing needs.

    Enhancing the associate membership status and privileges would enable and incentivize further FHLBank-HFA partnerships. Some ways in which FHFA and FHLBanks could expand the HFA associate membership status and privileges include authorizing HFAs to sponsor AHP applications, allowing more favorable terms and pricing for HFAs, creating HFA-sponsored secondary financing programs for homebuyers, entering into standby bond purchase agreements for variable rate bonds, engaging in joint Housing Credit and mixed-use development financing programs, supporting HFA bridge loans and permanent funding for Housing Credit developments, resolving issues with FHLB indemnification requirements, and favorable scoring for HFA financing in AHP applications.

    Thank you for your consideration of these comments. Please do not hesitate to contact me if we can provide additional information.

    Sincerely,

    Garth Rieman
    Director of Housing Advocacy and Strategic Initiatives