FHFA Proposes Changes to FHLB Housing Goals

The Federal Housing Finance Agency today proposed several changes to the housing goals for the Federal Home Loan Banks. The changes would affect all FHLBs that purchase mortgages through the Acquired Member Asset Program and would be phased in over three years.

Currently, FHLBs whose AMA purchases exceed $2.5 billion in a given year are subject to the housing goals. Goals performance is evaluated by comparing the proportion of an FHLB’s purchases that were affordable with the proportion originated in its  district reported as affordable in Home Mortgage Disclosure Act data.

The proposed changes would eliminate the retrospective evaluation using HMDA data and set a single prospective mortgage purchase housing goal as a share of each FHLB’s total AMA purchases. They would also expand participation by smaller institutions; remove volume thresholds and establish a process through which FHLBs  could propose alternative goals to the prospective goals set in the regulation; and simplify and expand the eligibility criteria to allow government-backed loans to count for goals purposes. Comments on the proposed changes are due in 90 days.