WASHINGTON—Saying it is seeking to help underserved borrowers, the Federal Housing Finance Agency (FHFA) has published a final rule on the Federal Home Loan Banks' (FHLB) housing goals, with a clarification that credit unions may participate.
NAFCU noted that last year it recommended credit unions be included in the rule, specifically for small member participation and affordable housing loans. As originally proposed, the rule appeared to exclude credit unions from the new small member participation housing goal, NAFCU explained.
Credit unions rely heavily on FHLBs and government-sponsored enterprises (GSEs) for liquidity purposes to provide their members with superior loan products. NAFCU's Economic & CU Monitor survey earlier this year found that 39% of respondents' credit unions use the FHLBs to offload mortgage loans from their balance sheets.
What Final Rule Would Do
According to the FHFA's release, the final rule would amend the FHLBs' housing goals to:
- Eliminate the retrospective evaluation using HMDA data and set a single prospective mortgage purchase housing goal as a share of each FHLBs' total Acquired Member Asset purchases
- Set a new member participation housing goal for participation by small institutions
- Eliminate the volume threshold and instead allow FHLBs to propose different levels for the goals for mortgage purchases and small member participation, subject to FHFA approval
- Simplify and clarify the eligibility criteria to enable federally backed loans sold by small institutions eligible to count for goals purposes.
The new goals are set to take effect in 2021, with the enforcement of the rule phased in over three years.