HOME Act will Strengthen Federal Home Loan Bank System
Washington, DC –- (RealEstateRama) — U.S Representatives Randy Hultgren (R-IL-14) and Gwen Moore (D-WI-04) have introduced bipartisan legislation to strengthen the Federal Home Loan Bank (FHLB) System by preserving access to mortgage credit and affordable housing assistance for millions of Americans.
H.R. 2890, the Housing Opportunity Mortgage Expansion (HOME) Act, would restore the membership of lenders in the Federal Home Loan Bank System if they joined before the Federal Housing Finance Agency (FHFA) proposed its recently finalized membership rule and if they can demonstrate a commitment to residential mortgage activities.
“The HOME Act recognizes that the Federal Home Loan Bank System is working, especially for my constituents in Illinois who are purchasing a home. It provides a reliable source of financing that community banks and credit unions in my community rely on for providing access to mortgage credit for families, not to mention its commitment to affordable housing through grant programs and down-payment assistance,” said Rep. Hultgren. “This legislation clarifies that companies with a history and mission of supporting residential housing should be able to continue to serve our communities.”
“It is essential that the FHLB has the capacity necessary to continue its mission to make homeownership possible for my constituents in Wisconsin,” said Rep. Moore.
“The Federal Home Loan Bank of Chicago is a key liquidity source and funding partner for many of our community bank and thrift members in Illinois. However, a regulation implemented last year requires it to terminate the memberships of two of its largest borrowers. As a result, the size and scope of its activities could be reduced significantly, impacting its ability to assist its remaining members and the communities they serve.” – Linda Koch, President and CEO, Illinois Bankers Association
“Funding from the Federal Home Loan Bank of Chicago is used every day by community banks and thrifts to make homeownership a reality for their Illinois customers or lower the cost of their current mortgage through refinancing.” – Erich Bloxdorf, President and CEO, Illinois League of Financial Institutions
“The Federal Home Loan Bank of Chicago is a key liquidity source and funding partner for many of our credit union members in Illinois. Member banks also use FHLB Chicago funds to make small business, agriculture and agribusiness loans, which support job creation and family farming throughout our state.” – Thomas Kane, President and CEO, Illinois Credit Union League
“The participation of larger financial institution members in the FHLBs enhances the value to members of all sizes, particularly smaller member banks and thrifts which often have limited or no direct access to the capital markets other than through their FHLB.” – David Schroeder, Vice President of Federal Government Relations, Community Bankers Association of Illinois
Background
On January 12, 2016, Federal Housing Finance Agency (FHFA) adopted a final rule which restricts FHLB membership eligibility. The final rule, defines “insurance company” to exclude so-called “captive insurers.” The final rule, therefore, prohibits membership through a captive insurer. The rule allows FHLB captive insurer members that joined prior to FHFA’s proposed rule up to five years to terminate their membership and those that joined after issuance of the proposed rule up to one year to terminate.
