The Federal Housing Finance Agency has completed amending its regulation governing the Federal Home Loan Banks' Affordable Housing Program to be more flexible.
The aim was to provide more flexibility at the local level to allocate their Affordable Housing Program funds, and to design their project selection scoring systems to address affordable housing needs in their districts. The amended rules remove requirements that exist through other federal programs--making the program easier for Federal Home Loan Banks and award recipients.
“We appreciate the thoughtful comments we received on the proposed rule and implemented many of those suggestions," said Melvin Watt, director of the FHFA. “We believe that those suggestions incorporated into the final rule will help to further strengthen this important program, which has supported more than one million units of housing affordable to low-income homebuyers and renters since its inception in 1990.”
Also, the rule authorizes the Federal Home Loan Banks to establish special competitive funds that target specific affordable housing needs in their districts. In addition, it removes the requirement for retention agreements for owner-occupied units where the Affordable Housing Program subsidy is used solely for rehabilitation, which reduces administrative and financial burdens on Federal Home Loan Banks, members and households related to calculating and obtaining household subsidy repayments.
The Federal Home Loan Banks must implement all changes in the final rule by Jan. 1, 2021, except that they must implement the changes regarding the owner-occupied retention agreement requirements by Jan. 1, 2020.
The Federal Home Loan Bank Act requires each Federal Home Loan Bank to establish a program to provide subsidies for long-term, low- and moderate-income, owner-occupied and affordable rental housing. Each bank is required to allocate annually 10 percent of its prior year's net income to fund its program to help subsidize the purchase, construction, and rehabilitation of affordable rental and owner-occupied housing. In 2017, the Federal Home Loan funded $384 million in Affordable Home Program funding.
