CONGRESS

SUPERVISION AND OVERSIGHT
Federal Home Loan
Bank Mission
and Affordable
Housing Programs
In 2015, FHFA continued its supervision and
oversight to ensure that the FHLBanks are focused
on their housing finance and community development
mission.
Core Mission of the
Federal Home Loan Banks
FHFA’s Core Mission Activities (CMA) regulation (12
CFR Part 1265.2) describes the mission of the FHLBanks
as providing financial products and services to members
and housing associates that assist and enhance those institutions’
financing of housing and community lending.
Long- and short-term advances (loans) to their members
(primarily collateralized by residential mortgage loans and
government and agency securities) have historically been
the primary mission asset of the FHLBanks. The CMA
regulation includes other types of assets, such as mortgage
loans that qualify as AMA, in the definition of core mission
activities.
In 2015, FHFA provided further guidance on core mission
activities by publishing Advisory Bulletin AB 2015-05,
“FHLBank Core Mission Achievement.” As described in
the Advisory Bulletin, FHFA will measure each FHLBank’s
core mission achievement by calculating the ratio of its
Primary Mission Assets (advances plus AMA) relative to
consolidated obligations. The Advisory Bulletin establishes
three general categories: 1) ratios at or above 70
percent indicate that a FHLBank’s activities are achieving
core mission; 2) ratios between the thresholds indicate
that other mission activities need to be considered; and 3)
ratios below 55 percent indicate that more fundamental
questions about the activities of the FHLBank need to be
addressed. FHFA began calculating these ratios at year-end
2015 using annual average par values as reported by the
FHLBanks in FHFA’s Call Report System. FHFA will assess
each FHLBank’s core mission achievement on an annual
basis as part of the examination process.
FHFA’s regulation on strategic business plans requires each
Bank’s board of directors to adopt, maintain, and periodically
review a strategic business plan that “describes how
the business activities of the Bank will achieve the mission
of the Bank consistent with” the core mission activities
provisions. FHFA expects that each FHLBank’s strategic
plan will address mission achievement and expects any
FHLBank with a core mission ratio that is markedly below
the preferred level to have a more thorough core mission
strategic plan.
At year-end 2015, the FHLBank System core mission ratio
exceeded 70 percent. Eight of the FHLBanks had ratios of
70 percent or higher, another FHLBank reached 69 percent,
and the remaining two FHLBanks had core mission
ratios between 55 and 60 percent.
FHLBank
Affordable Housing Program
The Bank Act requires each of the 11 FHLBanks to establish
an Affordable Housing Program (AHP) to provide
financing for the construction, purchase, or rehabilitation
of affordable housing for very low- and low- or moderateincome
households. AHP subsidies must be used either to
finance homeownership by households with incomes at
or below 80 percent of the area median income or finance
the purchase, construction, or rehabilitation of rental
housing in which at least 20 percent of the units will be
occupied by, and affordable to, households with incomes
at or below 50 percent of the area median income. AHP
applicants are FHLBank member financial institutions
that pass the subsidy through to an eligible beneficiary in
the form of subsidized advances or grants. Each FHLBank
annually funds its AHP with 10 percent of its preceding
year’s net earnings, subject to a minimum $100 million
contribution by the FHLBank System as a whole.
REPORT TO CONGRESS • 2015
49