ABA Recommends Changes to Proposed FHFA Rule

In a comment letter to the Federal Housing Finance Agency yesterday, the American Bankers Association encouraged FHFA to add greater flexibility for federal home loan banks under a proposed rule amending the acquired member assets regulation. The association pointed out that greater flexibility would allow the FHLBs to develop and enhance new products and features so that they can continue providing secondary market alternatives that many banks depend on to meet the mortgage needs of their customers.

Specifically, ABA recommended that FHLBs be permitted to use new risk-sharing structures to shift risk to capital markets, and that FHFA expand options for risk sharing and risk transfer between counterparties by allowing sales across FHLB districts. ABA opposed a restriction prohibiting acquired member assets program participants from selling mortgage loans made to directors, officers, employees, attorneys or agents of the member or its FHLB, arguing that these loans are held to the same standards as others and do not pose a greater risk.

The association also recommended that the FHFA relax its regulation surrounding new business activities and streamline its approval processes to allow FHLBs to keep pace with evolving industry trends. For more information, contact ABA’s Joe Pigg.