On November 7, The Federal Housing Finance Agency (FHFA), which is the regulator of the Federal Home Loan Bank system (FHLB), issued updated guidance for the FHLBs as part of their review of the mission and activities of the banks.
The FHLB system is nearing its 100th year of existence and FHFA sought industry input regarding the mission and activities of the FHLBanks in serving its members. The guidance affirms much of the existing mission but also lays out areas of new focus and clarifies many others.
What This Means: The FHLB system is owned by its member banks who use the FHLBanks to provide liquidity to serving the affordable single family housing market and for community building. The new guidance will incent the FHLB’s to focus on creating programs and products to serve the multifamily market and provide a source of additional liquidity for owners of multifamily buildings. This guidance lays out a roadmap for the regulator and the banks and will largely be implemented through rulemaking and guidance. There are a limited number of recommendations that would require Congressional action.
Industry Impact: With a greater focus on multifamily by the FHLBs the multifamily industry should benefit from the increased liquidity provided by the banking system.
NMHC’s Viewpoint: This is a positive outcome for our industry as the FHLBs previously provided little to no support for the financing needs of the multifamily industry. Ahead of this release, NMHC participated in the FHFA request for input and submitted a letter calling on the regulator to drive the FHLB system towards more actively supporting the multifamily market needs. On a positive note, FHFA recognized the importance of multifamily and encouraged the FHLBanks through goals and programs to support our industry.
What’s Next: NMHC will undertake a more detailed review of this guidance and will provide input on the expected rulemaking and guidance to be issued.
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