Comment Detail

Comment

I second the comments by Nick-Mitchell Bennett that dealt with "haircuts" or discounts applied on loan-to-value calculations for CDFIs. The policy change in 2016 for CDFIs decreased the loan-to-value for advances from 90% to 70% (with a blanket lien). We negotiated out of the blanket lien, dropping the loan-to-value to 60%! A 40% discount on mortgage loan assets is ridiculous. Does this policy mean that a mortgage originated by a CDFI is substantially less quality than a mortgage originated by a member bank? That is absurd and absolutely without any proof of fact. CDFIs pattern their underwriting off FNMA or FHA guidelines, similar to all banks, which adds to the dismay. Yes, CDFIs are neither regulated nor federally insured, but CDFIs suffer very few losses, even though they have a mission to serve a more risky population. The "haircut" or loan-to-value policy needs to be reviewed and addressed, as it is the mission of FHLBs to serve the underserved.

My other comment deals with the statement that FHLBs have never suffered a credit loss; that is a crazy statistic, and it is unclear why FHLB and FHFA are proud to recite. Losses are natural in the lending business. Suffering no losses does not make you more brilliant than the companies that incur losses. It portrays FHLB and FHFA as not doing enough to serve those in need since making loans is natural for a lending company, particularly companies with the word loan in their name. Take a chance and see what good you can do for those that need it, and that does not mean continuing to fund depository institutions as they already have funding sources.