The Federal Housing Finance Agency’s comment period for its proposed rule on the Federal Home Loan Bank closes Monday.
The proposed rule would revise the FHFA’s existing membership regulation to require that members maintain a commitment to housing finance — and that only eligible entities gain access to bank advances and the benefits of membership.
Members would be required to maintain 1% of assets in home mortgage loans and maintain 10% residential mortgage loans ongoing, are the main two features that the National Association of Federal Credit Unions opposes.
Currently, 19% of all credit unions are members of an FHLB, and these credit unions represent 75.8% of the total credit union assets and this number continues to grow.
“While NAFCU appreciates FHFA’s intention of fostering FHLB’s housing finance missions, we believe the current regulatory requirements effectively ensure that FHLB members demonstrate ongoing commitments to mortgage lending in their communities,” NAFCU said in a letter to the FHFA
“Given the sufficient existing requirements, and the lack of statistical support for the proposed changes, NAFCU does not believe FHFA needs to move forward with the newly proposed “ongoing” membership requirements for depository institutions in this rulemaking,” the letter added.
Here's what NAFCU had to say about the aforementioned standards:
1% standard:
“The proposed one percent standard is unnecessarily rigid because it fails to take into account fluctuations that can occur in portfolios due to national changes in the housing market or local economic conditions.”
10% standard:
“Extending the 10% standard on an ongoing basis would unnecessarily restrict a credit union’s ability to provide the mortgage financing needed by their members and the communities that they serve. Further, applying the 10% standard to credit unions on an ongoing basis would disadvantage them and their members when compared to other community financial institutions.”
Real estate investment trust memberships also hang in the balance.
REITs use specialized insurers to join Federal Home Loan Banks, and the proposed new rules would dial those specialized insurers out.
These specialized “captive insurers” would have their memberships sunset after five years.
David Jeffers, executive vice president of policy and public affairs at the Council of Federal Home Loan Banks said the proposed standards will, in time, do more harm than good.
"For 25 years Congress has made clear the purpose of Federal Home Loan Banks, and our purpose is to maintain a safe and secure model and to provide liquidity to a broad spectrum of business for broad use,” Jeffers told HousingWire. “This goes much further, we see this as an anti-liquidity and anti-housing regulation, and a threat to the fundamental purpose of home loan banks."
