ARLINGTON, Va.—NAFCU ad CUNA continue to express concern that the Federal Housing Finance Agency’s (FHFA) proposed changes to its eligibility requirements for Federal Home Loan Bank (FHLB) membership will make it difficult for CUs to belong to the FHLB.
In a letter Monday to the FHFA, NAFCU Director of Regulatory Affairs Alicia Nealon noted that the trade association believes the current regulatory requirements effectively ensure that FHLB members “demonstrate ongoing commitments to mortgage lending in their communities.”
Nealon stated in the letter that FHFA’s changes to FHLB membership requirements should not be one-size-fits-all since each credit union has a unique membership with unique characteristics. Instead, “they should provide credit unions and other community institutions with the flexibility necessary to continue to meet their members’ needs.”
In the FHFA’s proposal, an institution would have to maintain at least 1% of its total assets in home mortgage loans. Nealon stated NAFCU is concerned that the proposed 1% standard is too rigid and encourages FHFA to retain the current “makes long-term home mortgage loans” requirement.
In addition to its general membership eligibility requirements, FHFA’s FHLB membership regulation also requires insured depository institutions, other than community financial institutions, to hold at least 10% of their total assets in residential mortgage loans in order to be eligible for membership in a FHLB, NAFCU noted.
Nealon said NAFCU opposes the proposed extension of the 10% standard. “We believe that credit unions should have the flexibility to manage their mortgage portfolios with the best interest of their members in mind, rather having to manage their portfolios to meet an arbitrary standard.”
CUNA SVP and Deputy General Counsel Mary Dunn said the trade association is “very concerned the agency is ratcheting up the membership requirements and making it very difficult for credit unions to belong to the Federal Home Loan Banks.”
In November, FHLB Director Mel Watt stated that fewer than 100 financial institutions will be negatively impacted by proposal to adjust membership criteria.
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