• Affordable Housing Program offers flexible funds
  • Community Investment Program offers low-cost loans
  • Banks implement new economic development programs
  • Who to contact for more information

For most of its 70-year history, the Federal Home Loan Bank System has been content to keep a low public profile. Not anymore. In 2001, 10 of the 12 district banks in the system launched new public awareness campaign to showcase their expanding role in community lending.
The 10 district banks are calling themselves the FHLBanks, not only because it’s short but also because it de-emphasizes their traditional role as “home loan” banks. The Council of FHLBanks, a trade group formed in 1998 to represent the banks in Washington, is promoting the banks as “a nation of local lenders.” The council says that slogan captures the national scope of the institutions as well as the local focus of its members.

The council’s public outreach effort reflects the extensive changes the system has undergone in the last 12 years, changes that had their roots in the savings and loan crisis of the late 1980s. At that time, most of the system’s members were savings institutions that focused on home mortgage lending. In June 2001, its 7,700 members included 5,681 commercial banks and only 1,547 thrifts. Some credit unions and insurance companies also are members.

They engage in a wide range of lending for affordable rental housing as well as community and economic development.

As a government-sponsored enterprise (GSE), the system is required by law to engage in certain community lending activities. The district banks must contribute 10% of their net revenue each year to the Affordable Housing Program. They also operate a program of low-interest loans that most banks refer to as the Community Investment Program. Many banks also operate economic development loan programs targeted to low-income and underserved areas.

The 10 council members are: Atlanta; Boston; Cincinnati, Ohio; Des Moines, Iowa; Dallas; Indianapolis; Seattle; San Francisco; Topeka, Kansas; and Pittsburgh, Pa. The Chicago and New York district banks are not members.

Affordable Housing Program offers flexible funds

Under the Affordable Housing Program (AHP), each of the district banks is required by law to put aside for affordable housing 10% of net income or $100 million per year, whichever is greater. The total nationwide funding level reached about $246 million in 2001. The council calls the funding the “super glue” that holds deals together “The Affordable Housing Program is often the only source of pure flexible grant money. Project sponsors love AHP because we can commit and leave it in until the rest of the money comes together,” said Ray Christman, president, FHLBank of Atlanta.

The FHLBanks have invested more than $1 billion in affordable housing projects through its AHP since the program’s inception in 1989. The program has helped finance more than 14,000 units.

The AHP is used to subsidize the interest rate for advances (loans) and to provide direct subsidies to FHLBanks’ member institutions to finance owner-occupied or rental housing projects for low- and moderate-income households. AHP funds usually take the form of grants.

Each of the 12 FHLBanks awards AHP funds twice a year. It’s a very competitive program. Typically, less than half of the applicants win funding in each round.

In order to be eligible to compete for AHP funds, projects must meet the basic national requirements outlined by the Federal Housing Finance Board (FHFB), a regulatory agency.

It must be either a rental housing or owner-occupied project. The development must begin using the FHLBank’s assistance within 12 months of receiving the award and meet project sponsor qualifications. Compliance with fair housing laws also is required.

The FHFB administers the AHP’s regulations. The 12 district banks use this framework as the backbone for their affordable housing programs and then have the flexibility to tailor it to the district’s distinct needs.

Each FHLBank designs its own 100-point scoring system that is based on the scoring criteria defined by the FHFB. These criteria include nonprofit sponsorship, demographic targeting, providing housing for the homeless, promotion of empowerment, the use of donated government-owned or other properties, community stability, the amount of AHP subsidy needed per unit and meeting the district’s first and second priorities.

Accessing each FHLBank’s Web site is a good way to gain an understanding of the program and the district’s funding priorities. Also, carefully prepare the application to ensure there are no mistakes. Make sure that funding sources and uses balance, present the real need for subsidy, and show that the project is organized enough to proceed within 12 months.

Community Investment Program offers low-cost loans

Through the FHLBanks’ Community Investment Program (CIP), housing sponsors can get loans at rates up to 35 basis points less than regular rates.

The low-cost loans are offered on different terms under different program names at the 12 district FHLBanks but are generally available on a continual basis throughout the year.

The CIP provides discounted advances (loans) to member financial institutions making residential loans that benefit families earning at or below 115% of area median income, including rental and for-sale housing.

It goes to finance commercial and economic development activities, and also provides funding for community-oriented facilities like day-care centers and educational facilities.

Like the AHP, the FHFB defines basic program regulations, but the CIP varies between each FHLBank.

For example, the FHLBank of Atlanta offers advances that are available with fixed or adjustable rates, terms from one month to 20 years, and with interest-only or amortizing payments. A financial institution can use a CIP advance to fund numerous small loans or to match-fund larger loans. Advances are available from five to 35 basis points below regular advance rates.

Banks implement new economic development programs

The FHLBanks’ community lending efforts traditionally have focused on housing, but many of the 12 district banks now are branching out into small business and economic development lending.

While the banks must provide a certain amount of financing for affordable housing under federal law (because they are a government-sponsored enterprise), they are not mandated to finance economic development.

However, recent legislation eased restrictions on member banks’ ability to finance commercial real estate and small business and agricultural projects.

In addition, the FHFB issued a new regulation (the Community Investment Cash Advance regulation) that permits and encourages the FHLBanks to finance community economic development.

The economic development programs are subject to only general national guidelines and vary from district to district. For example, the FHLBank of Atlanta is now in its third year of economic development lending. Its program is called the Economic Development and Growth Enhancement program (EDGE) and has a $6 million budget this year.

Like the bank’s AHP, the EDGE program is a flexible program offering low-cost capital. It can be used in a variety of ways for programs sponsored by nonprofits located in disadvantaged areas, or which create jobs and provide services to low-income households.

Among the eligible uses are rehabilitation of commercial structures; capitalization of small business or micro-loan funds operated by member banks; and public infrastructure improvements that help spur economic development.

It is operated through the district bank’s member banks in partnership with nonprofit or public sector organizations. The funds can be offered as grants or low-interest loans. Typically, the district bank makes loans at a very low rate of interest. There is an annual application process.

The bank also operates an Economic Development Program that provides loans at only a slight mark-up above the bank’s cost of funds. Advances are available with fixed or adjustable rates, terms of one month to 20 years and with interest-only or amortizing payments.

The district bank’s newest initiative is a predevelopment fund with $1 million available in 2001. It provides loans to help nonprofit housing and economic development project sponsors cover such upfront costs as determining project feasibility and acquiring site control. If projects go forward, the loans are to be paid back. If not, they are forgiven.

The FHLBank of San Francisco also is financing economic development. It calls its program Advances for Community Enterprise. The program is similar to the CIP but is targeted toward job creation and retention and community economic development.

The Chicago district bank began its Economic Development Advance (EDA) program in 2000 to provide loans for community and economic development projects inclusive of community facilities, infrastructure, brownfields and small businesses. A $25 million pool has been reserved for use in the program. The advances are for five to 10 years at the CIP rate, with a significant rate discount in the first year.

Who to contact for more information

FHLBanks’ Community Investment Officers

Federal Home Loan Bank of Atlanta

P.O. Box 105565

Atlanta, GA 30348-5565

1475 Peachtree St. NE Ste. 400

Atlanta, GA 30309-3037


http://www.fhlbatl.com Atlanta district states: Alabama, District of Columbia, Georgia, Florida, Maryland, North Carolina, South Carolina, Virginia

Federal Home Loan Bank of Boston

P.O. Box 990411

Boston, MA 02199-0411

111 Huntington Ave. Ste. 2400

Boston, MA 02199-7614



Boston district states: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, Vermont

Federal Home Loan Bank of Chicago

111 E. Wacker Dr. 7th Fl.

Chicago, IL 60601-4361

Eldridge Edgecombe, Community Investment Officer, 312-565-5705,eedgecombe@fhlbc.com


Chicago district states: Illinois, Wisconsin

Federal Home Loan Bank of Cincinnati

P.O. Box 598

Cincinnati, OH 45201-0598

Carol Peterson, Community Investment Officer, 513-852-7615,petersoncm@fhlbcin.com


Cincinnati district states: Kentucky, Ohio, Tennessee

Federal Home Loan Bank of Dallas

P.O. Box 619026

Dallas, TX 75261-9026

Shelia McAfee, Community Investment Officer, 214-441-8636, shelia.mcafee@fhlbc.com


Dallas district states: Arkansas, Louisiana, New Mexico, Mississippi, Texas

Federal Home Loan Bank of Des Moines

907 Walnut St.

Des Moines, IA 50309-3512



Des Moines district states: Iowa, Minnesota, Missouri, North Dakota, South Dakota

Federal Home Loan Bank of Indianapolis

8250 Woodfield Crossing Blvd.

Indianapolis, IN 46240-7324

Michelle Wilson, Community Investment Officer, 317-465-0371, mwilson@fhlbi.com


Indianapolis district states: Indiana, Michigan

Federal Home Loan Bank of New York

101 Park Ave. 5th Fl.

New York, NY 10178-0599

Donald J. Wolff, Senior Vice President, Community Investment,212-441-6813

30 Montgomery St.

Jersey City, NJ 07302-3829



New York and New Jersey district states: New York, New Jersey,

Puerto Rico and Virgin Islands

Federal Home Loan Bank of Pittsburgh

601 Grant St. Ste. 1000

John Bendel, Community Investment Officer, 412-288-2826

Pittsburgh, PA 15219-4455


Pittsburgh Jersey district states: Delaware, Pennsylvania, West Virginia

Federal Home Loan Bank of San Francisco

P.O. Box 7948

San Francisco, CA 94120-7948

600 California St. 3rd Fl.

San Francisco, CA 94108-2735


307 E. Chapman Ave.

Orange, CA 92866-1507

James E. Yacenda, Vice President and Community Investment Officer, 714-633-1271, yacendaj@fhlbsf.com


San Francisco district states: Arizona, California, Nevada

Federal Home Loan Bank of Seattle

1501 4th Ave. Ste. 1900

Seattle, WA 98101-1693

Jennifer Ernst, Assistant Vice President, Affordable Housing Projects, 206-340-8737, jennifere@fhlbsea.com


Seattle district states: Alaska, Guam and Hawaii, Idaho, Montana, Oregon, Utah, Washington, Wyoming

Federal Home Loan Bank of Topeka

1 Security Benefit Pl Ste. 100

Topeka, KS 66606-2444

P.O. Box 176

Topeka, KS 66601-0176


http://www.fhlbtopeka.com/community_lending.htm Topeka district states: Colorado, Kansas, Nebraska, Oklahoma

Office of Finance

11921 Freedom Dr. Ste. 1000

Reston, VA 20190-5636


Federal Housing Finance Board

Federal Housing Finance Board

1777 F St. NW

Washington, DC 20006-5210



Federal Home Loan Banks and Programs

Federal Home Loan Banks - Bank Districts

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