In a comment letter to the Federal Housing Finance Agency on Friday, the American Bankers Association called on FHFA to reconsider its approach to modifying the Federal Home Loan Bank Affordable Housing Program. ABA noted that the FHFA’s recent proposed rule would impose a complex, highly prescriptive, outcomes-based framework for awarding AHP funds that is less flexible, more complex from a compliance standpoint and less transparent.
The proposal would require a majority percentage of AHP funds to be awarded to certain types of projects established by FHFA, which ABA noted would serve to centralize decision making in Washington, D.C., rather than in the local communities where needs exist. It would also establish that at least 55 percent of a FHLB’s required annual AHP contribution is awarded to projects or households that meet at least two of the three regulatory priorities established in the rule. FHLBs that do not meet these requirements will face harsh penalties under the proposal that do not exist currently.
Since its creation in 1990, the AHP has become an important tool for banks to help address affordable housing needs in their local communities. “Revisions to the AHP should focus on making the program more efficient and responsive to locally identified needs, not on imposing strict new national standards and penalties,” ABA said.