PCRG Reacts to Possible Changes to the FHLB’s Affordable Housing Program

28 Jun


One of the Federal Home Loan Bank’s (FHLB) flagship programs – the Affordable Housing Program (AHP) – will soon be changing if new proposed rules are adopted. The AHP, as it currently stands, is a flexible pool of funds generated from 10% net earnings from each FHLBank. PCRG’s members are likely familiar with the First Front Door program, a grant of up to $5,000 to cover down payment or closing costs for low- to moderate income homebuyers, but that is just one of several ways that AHP works to keep housing affordable in our region. AHP is also used by local nonprofits to rehabilitate the houses of low-income homeowners and provide additional financing for the development of affordable multifamily units.

In March, a series of proposed rule changes were released that could fundamentally alter how the money is disbursed. As it stands, the FHLB uses as straightforward 100-point scoring method to award funds to their applicants. Although there are flaws with this system, it is transparent and responsive to local needs. What is being proposed instead relies mon a more prescriptive, national-level policy agenda that gets rid of the point system and instead obligates district FHLB branches to awards funds based on the certain categories prioritized by federal regulators.

Earlier this month PCRG, along with several other members, sent in comments to the Federal Housing Finance Agency (FHFA) in Washington D.C. outlining our concerns with the proposed changes. At its core, we believe the changes will slow down the creation and preservation of affordable housing. More specifically, we see flaws in the following areas:

  • If AHP funds go to creating multifamily affordable housing, 55% or more have to be reserved for those making 50% or less of area median income. We worry that this could concentrate poverty while making it harder to developers to cross-subsidize.
  • If AHP funds are used to purchase or rehabilitate a home, the owner must remain its primary occupant for five years. This requirement creates less churn in more destabilized neighborhoods and prevents flipping. Under the proposed rule changes, this residency requirement would be eliminated.
  • While all FHLB branches currently use the 100-point scoring method outlined above, the proposed changes would replace it with an outcomes-based model. Regulatory priorities are being given out to communities from the national level, forcing them to fit their needs into this new vision for how AHP should function, not the other way around.
  • Oversight of projects that have been awarded AHP funds will be reduced or entirely eliminated. Monitoring of LIHTC projects, AHP projects with additional HUD or USDA funding, and the First Front Door program will no longer require initial monitoring or documentation. The removal of oversight, in our experience, rarely improves outcomes.

Although the comment period has closed, we encourage all of you who rely on the AHP program to continue to reach out to the FHFA. If you would like more information about AHP and the proposed rule changes, please contact me at alevy@pcrg.org.


Alix Levy

Research Analyst at PCRG
Despite repeated attempts, Alix has always found a reason to stay in her hometown of Pittsburgh. She received both her undergraduate and graduate degrees from the University of Pittsburgh, with a one-year stint in Freiburg, Germany studying the European Union. Prior to joining PCRG, Alix was a community development consultant and adjunct professor. You can find her running around the East End, reading on her back patio, yelling about politics, and planning what to cook next.