On March 14, 2018, the Federal Housing Finance Agency (FHFA) released a Notice of Proposed Rulemaking to amend the Affordable Housing Program (AHP) regulation. On April 29, 2018, the FHFA issued a correction.

The proposed amendments will affect how Federal Home Loan Bank of Des Moines (FHLB Des Moines) members and affordable housing providers use the Competitive Affordable Housing Program and down payment products (Home$tart®, Home$tart Plus and the Native American Homeownership Initiative).

Public comments are due to the FHFA by Tuesday, June 12, 2018 at 5:00 PM (ET).

We have prepared a summary of the proposed amendments and provided additional information about the proposals that we believe will most affect members' and housing providers' strategies for meeting community needs.

Don't miss this opportunity to share your expertise about how AHP funds can be most impactful in your community. 

Read the AHP Comment Letter from the FHLBanks

Overview

The proposed rule to amend the AHP regulation offers some benefits, but also poses a number of challenges. The primary challenge is the proposed outcome framework that requires a significant proportion of the total annual AHP contribution to meet priorities established by the FHFA. The proposed outcome framework increases the complexity of AHP and limits the Federal Home Loan Banks' (FHLBanks) ability to respond to local affordable housing needs.

Read the proposed rule in its entirety or view a summary of the proposal.

Summary

Current Scoring System:Straight-forward, transparent, incents types of projects

   7 FHFA scoring categories
+ 2 FHLBank regional categories
= 100 points

Proposed Outcome Framework: Complex, less transparent, requires types of projects

  • At least 10 percent of annual AHP used for home purchase.
  • At least 55 percent of annual AHP is awarded under the General Fund and Targeted Fund(s) and Homeownership Set-Aside Program(s) to two of three FHFA regulatory priorities, with a 10 percent minimum for each of those priorities.
  • At least 55 percent of General Fund and Targeted Funds awarded to two AHP statutory priorities.
  • At least 55 percent of rental units in the General Fund and Targeted Fund reserved for households earning 50 percent or less of area median income.

Four required outcomes use three different metrics.

Impact on Financial Institutions

What will the impact be on our member financial institutions?

The proposed changes to the AHP regulation would impact the proportion of total AHP funds that are available for the down payment products, the maximum grant amount available for individual households through the down payment products, and whether or not retention agreements are required for owner-occupied units that are assisted through the Competitive Affordable Housing Program and down payment products.

Availability of Funds for Down Payment Products

The original proposal theoretically increased the amount of funds that would be allocated to down payment products but, in actuality, to comply with the FHFA's proposed outcome requirements, the percentage of AHP funds available for down payment products would be the same or less.

The FHFA's correction amended the calculation for complying with the proposed outcome requirements. The amended proposal would allow the FHLBanks to allocate up to 40 percent of the annual AHP contribution to the down payment products. Currently, up to 35 percent of the annual AHP contribution may be allocated to the down payment products.

Proposed Solution: FHLB Des Moines supports this proposal for increased flexibility for our members to help finance their low- and moderate-income customers' opportunities for home purchase.

Maximum Per Unit Grant

The proposed rule would increase the maximum grant from $15,000 per household to up to $22,000 per household.

Proposed Solution: FHLB Des Moines supports this proposal for increased flexibility to provide a higher grant amount, which may benefit households requiring a deeper subsidy, such as those living in high cost areas and those with lower incomes.

Retention Agreements for Owner-occupied Housing

The proposed rule would eliminate the current requirement for a five-year retention for owner-occupied housing, including owner-occupied housing assisted through the Competitive Affordable Housing Program and down payment products.

Proposed Solution: Allow each FHLBank to determine the circumstances in which it is appropriate to require a retention agreement. For example, eliminating the five-year retention agreement is a beneficial amendment for households that need a moderate amount of AHP to purchase, rehabilitate or construct a home. However, for houesholds requiring a larger amount of AHP, it may introduce a risk for misuse.

How to Comment

Let the FHFA know what you think.

Comments to the AHP proposed rule are due to the FHFA by Tuesday, June 12, 2018 at 5:00 PM (ET).

Tips on filing a comment:

  • Use examples from your organization's work to illustrate the impact of the proposal based on FHLB Des Moines concerns, or other concerns you may have.
  • Direct your comments to one or more of the FHFA's 41 questions. Reference the question number in your comment. This does not preclude additional comments not covered by the 41 questions.
  • When submitting a comment, you can type directly into the form provided on the FHFA website or you may produce the comment on your letterhead and upload it as a PDF file.
  • The Affordable Housing Program was created by Congress. You may want to send a copy of your comments to your Member of Congress and Senators so that they are informed about how the proposed changes may impact affordable housing in their district.

You may submit your comments on the proposed rule, identified by regulatory information number (RIN) 2590-AA83, by any one of the following methods:

FHFA Website

Federal eRulemaking Portal

http://www.regulations.gov

Follow the instructions for submitting comments. If you submit your comment to the Federal eRulemaking Portal, please also send it by e-mail to FHFA at RegComments@fhfa.gov to ensure timely receipt by FHFA. Include the following information in the subject line of your submission: Comments/RIN 2590-AA83.

Hand Delivered/Courier

The hand delivery address is: Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA83, Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street, SW., Washington, D.C. 20219. Deliver the package at the Seventh Street entrance Guard Desk, First Floor, on business days between 9:00 AM and 5:00 PM (ET)

U.S. Mail, United Parcel Service, Federal Express, or Other Mail Service

The mailing address for comments is: Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA83, Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street, SW., Washington, D.C. 20219. Please note that all mail sent to FHFA via U.S. Mail is routed through a national irradiation facility, a process that may delay delivery by approximately two weeks. For any time-sensitive correspondence, please plan accordingly.