Federal Housing Finance Agency (FHFA) Director Sandra L. Thompson has declared that a top-down review of the agency will begin later this year in order to make sure the Federal Home Loan Banks are positioned to meet the needs of the public not just in the short term, but for years to come.
“FHFA plays a vital role in supporting affordable, equitable, and sustainable access to mortgage credit,” said Thompson. “FHFA’s regulated entities function as a reliable source of liquidity and funding for housing finance and community investment. As the Federal Home Loan Banks (FHLBanks) approach their centennial, FHFA will conduct a comprehensive review to ensure they remain positioned to meet the needs of today and tomorrow.”
The review, which will also feature a series of public meetings starting September 29, aims to get feedback from member banks and stakeholders to evaluate the mission of the FHFA, FHLBank membership requirements, and operational efficiencies of the FHLBanks. FHFA will hear from stakeholders on the FHLBanks’ role or potential role in addressing housing finance, community and economic development, affordability, and other related issues.
Specifically, the FHFA is specifically interested in receiving feedback in six key areas:
- The FHLBanks’ general mission and purpose in a changing marketplace;
- FHLBank organization, operational efficiency, and effectiveness;
- FHLBanks’ role in promoting affordable, sustainable, equitable, and resilient housing and community investment;
- Addressing the unique needs of rural and financially vulnerable communities;
- Member products, services, and collateral requirements; and
- Membership eligibility and requirements.
“MBA applauds FHFA’s announcement to examine the appropriate role of the FHLBank system. We have long supported the responsible expansion of FHLBank membership eligibility to better reflect the diverse providers of single-family and multifamily housing finance throughout the country. The Banks’ membership framework has only seen piecemeal updates since its creation, and there’s a need for an FHLB system that better reflects today’s housing finance market—not one from the 1930s. Independent mortgage banks have been the largest provider of single-family mortgages for much of the past decade and now service about half of all home loans. Similarly, REITs are significant investors in both single-family and multifamily mortgages, as well agency MBS.”
"Today’s housing finance market is also dominated by the securitization process. Any comprehensive review of the FHLBank System should also include examining the ways in which the Banks’ perform their critical mission as a liquidity backstop by rethinking the type of securitization-related collateral members can pledge.”
"The business activities of these currently-excluded entities are strongly aligned with the FHLBank housing mission, and FHLBank membership could provide added resiliency to the housing finance system if these entities could participate as members.”
"This announcement is well-timed, as MBA and the entire industry seek to address housing affordability and the racial homeownership gap.”
Click here to register for the September 29 meeting being held in Washington D.C. from 12:30-4:00 p.m. to attend in person or virtually. The FHFA is also accepting written comments until October 21, click here for more info.