Alert January 04, 2011

FHFA Issues ANPR Seeking Comment on Potential Revisions to FHFA Regulations That Could Tighten Requirements for FHLB Membership

The Federal Housing Finance Agency (“FHFA”) issued an Advance Notice of Proposed Rulemaking (“ANPR”) in which the FHFA stated that it is conducting a review of its regulations to identify provisions that need to be updated to ensure that FHFA regulations are consistent with the statutory requirement that there be a nexus between membership in Federal Home Loan Banks (“FHLBs”) and the housing and community development mission of the FHLBs.  The ANPR states that there are essentially three categories of institutions currently eligible for FHLB membership:  federally-insured depository institutions; insurance companies; and Community Development Finance Institutions.  FHFA poses 16 questions in the ANPR concerning potential revisions to its regulations and invites public comment.  Among the issues raised by FHFA is whether certain membership requirements imposed at the time that an institution joins an FHLB should be modified and tightened to mandate compliance with the requirement throughout the period of membership.  The three requirements as to which the FHFA may require compliance by FHLB members throughout the membership period are that a member: (1) have at least 10% of its assets in residential mortgage loans; (2) make long-term home mortgage loans; and (3) comply with the FHFA’s “home financing policy.”  Comments on the ANPR are due by March 28, 2011.