We hear you about FHLBank financing
The Federal Agency for Housing Financing (FHFA) said on Thursday that it will aim to simplify the process of financing affordable housing projects through the financing Federal home loan banks (FHLBanks). The advisory bulletin came in response to comments from sponsors who called the process too cumbersome.
“Each of the eleven FHLBanks operates an Affordable Housing Program (AHP) that provides grants or subsidized advances to finance rental housing and homeownership opportunities for low- and moderate-income households,” the agency said.
“Nonprofits and other sponsors submit an application to the FHLBank, including a request for financial assistance to fill a project’s funding gap. FHFA, which oversees the FHLBanks, has heard feedback that the process is too burdensome.”
In response to this feedback, the agency issued a statement Advisory Bulletin 2024-05. It highlights the ongoing need for affordable housing and seeks to address it by easing certain regulatory burdens associated with the AHP program.
“FHFA is simplifying the process of applying for AHP financing to expand the number of project sponsors and improve the ability of the FHLBanks to meet affordable housing needs in their districts,” FHFA Director Sandra Thompson said in a statement. “Today’s Advisory Bulletin demonstrates FHFA’s focus on ensuring the FHLBank System remains a cornerstone of support for affordable housing.”
Among the inputs considered, the bulletin highlights feedback illustrating the need to address certain regulatory hurdles.
The FHFA aims to “reduce unnecessary barriers to effective implementation of the AHP, such as uncertainty about the AHP grant amount or the amount of debt financing in later project phases,” the document said.
The agency added in its announcement that the feedback largely emerged during roundtable discussions and listening sessions that resulted from an initiative to recognize the 100th anniversary of the FHLBank system.
FHFA also requested input on the AHP application process. Respondents suggested “relieving regulatory burdens and restrictions associated with the AHP, and consistently identified determining the need for subsidy as a significant challenge,” the agency said.
“They specifically highlighted the uncertainty for project sponsors regarding the size of their AHP awards and sponsor compliance burdens compared to other affordable housing financing sources.”
The document also emphasizes that funding requests must be continually scrutinized using “rigorous feasibility guidelines, based on sound reasoning, to ensure that AHP funds support the projects most needed.”
