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Federal Home Loan Bank

Federal Home Loan Banks and their members are the largest source of residential mortgage and community development credit in the United States. There are twelve Federal Home Loan Banks (FHLBanks), each with its own president and board of directors, located in different regions of the country, with twelve distinct sets of customers, all with differing kinds of demand for their products, services and expertise.

The FHLBanks provide billions of dollars of primary liquidity to approximately 80% of the nation's financial institutions. By providing this assured liquidity to its members, the FHLBank System allows member institutions to remain active lenders, in all economic cycles, to help their local economies grow.

"The mission of the Federal Home Loan Banks is to provide cost-effective funding to members for use in housing, community, and economic development; to provide regional affordable housing programs, which create housing opportunities for low- and moderate-income families; to support housing finance through advances and mortgage programs; and to serve as a reliable source of liquidity for its membership."

For Idaho, the FHLB bank office is in Seattle.
www.fhlbsea.com

Affordable Housing Program

Funded with 10 percent of the Seattle Bank's annual net income, the Affordable Housing Program (AHP) offers grants to member financial institutions and their community sponsors to stimulate affordable rental and homeownership opportunities for low-income households.

AHP grants have been used in a variety of ways, including to:

• Reduce mortgage principal
• Fund rehabilitation and new construction
• Cover down payment and closing costs
• Lower the interest rate on a loan

All applications are submitted through member banks.

The member bank must underwrite the development proposed in the AHP application and review the project’s schedule to reasonably assure that it will be ready to draw funds within one year of application approval. Project sponsors must partner with a Seattle Bank member institution to submit an AHP application. Projects must include the purchase, construction, or rehabilitation of owner-occupied or rental housing. Transitional housing and overnight shelter projects are also eligible.

Homeownership projects must serve households earning 80 percent or less of area median income, adjusted for family size.

Rental projects must serve households earning 80 percent or less of area median income. At least 20 percent of the total units must be occupied by and affordable to households earning 50 percent or less of area median income, adjusted for family size.

Sponsors of rental housing must have some ownership in the property once a project is completed.

Sponsors of homeownership projects are not required to maintain an ownership interest, but must be integrally involved in the project's development.

Applications from nonprofits, government agencies, and Native American organizations are more competitive than those from for-profit entities.

Applications are due September 1, 2006 and up to $250,000 for each project may be requested.

Community Investment Program and Economic Development Fund

The Seattle Bank offers two programs that are ideal for Seattle Bank members looking to support affordable housing and economic development initiatives with a lower-cost loan:

• The Community Investment Program (CIP) offers loans for affordable housing.
• The Economic Development Fund (EDF) offers loans for community economic development.
• These loan programs are unique in that Seattle bank members can apply for advances priced at the cost of funds, for terms from five to 30 years. Rate locks are available for periods up to 24 months.

CIP/EDF loans have been used to finance affordable homes, multi-family rental projects, new small businesses, new roads and bridges, and sewage treatment plants. They are especially effective when used to support housing and commercial development in distressed or rural areas where financial resources are scarce.

Projects funded with CIP/EDF advances may also benefit from Standby Letters of Credit (LOCs), which provide Seattle Bank members with an efficient and low-cost way to secure contractual agreements with third parties and guarantee their financial strength to perform as agreed in a contract. Standby LOCs may be issued for up to 20 years when used to finance housing or to support an interest-rate swap and may be secured with a variety of collateral types. 

CIP loans supporting affordable housing must benefit households that earn up to 115 percent of area median income.

EDF loans supporting business or commercial projects must benefit households earning up to 115 percent of area median income in rural areas and up to 100 percent of area median income in urban areas.

Funding is available continuously through a noncompetitive application process.

Home$tart Program

Home$tart promotes homeownership by helping first-time homebuyers earning up to 80 percent of their area’s median income purchase a home.

• The Home$tart Program provides $3 for every $1 a family contributes up to $5,000.
• The Home$tart Plus Program provides households receiving public housing assistance with $2 for every $1 of the household’s funds, up to $10,000.

Home$tart grants may be used for downpayments, closing costs, or rehabilitation of an owner-occupied housing unit, including a condominium or cooperative housing unit, to be used as the household’s primary residence. Grants may be used in combination with funds from other sources.

Funding for the Home$tart Program has been significantly reduced in 2006.