AFFORDABLE HOUSING PROGRAM

Program Summary

Introduction

The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) established the Affordable Housing Program (AHP) in August 1989. The Federal Housing Finance Board (Finance Board) issued and published final regulations for the program in the Federal Register on March 1, 1991. The Finance Board issued and published comprehensive revisions to the regulations for the AHP in the Federal Register on August 4, 1997, Vol. 62, No. 149, beginning on page 41812. The provisions of the new regulation, effective January 1, 1998, are described below.

The AHP is administered by each District Federal Home Loan Bank (FHLBank). Applications should be made to the FHLBank in your District.

The purpose of the AHP is to subsidize the interest rates for advances (loans) and to provide direct subsidies to FHLBank System member institutions engaged in lending for long-term, very low-, and low- and moderate-income, owner-occupied and affordable rental housing.

The program is designed to encourage members to undertake creative efforts and increase their participation in and support for efforts directed towards increasing the supply of affordable housing in the members’ FHLBank District. Loans by member institutions using AHP subsidies should meet prudent, flexible, and innovative underwriting standards that do not expose members to undue risk.

Advances under this program may be used in conjunction with other sources of funds such as the FHLBank System's Community Investment Program, Low-Income Housing Tax Credits, as well as other federal, state, local, or private assistance programs.

Subsidies under the AHP must be used:

• To finance the purchase, construction, and/or rehabilitation of owner-occupied housing for very low-, and low- and moderate-income households; or
• To finance the purchase, construction, and/or rehabilitation of rental housing, at least 20 percent of the units of which will be occupied by and affordable for very low-income households for at least 15 years.

Competitive Application Process

The AHP has a competitive application process and an optional homeownership set-aside process. Eight of the twelve FHLBanks have established Homeownership Set-Aside Programs.

Eligibility Requirements

Under the competitive application process, projects are first evaluated to determine whether they meet the following eligibility requirements:

1. Owner-occupied or rental housing
2. Project feasibility and the need for subsidy
3. Ability of the project to begin using FHLBank assistance within 12 months
4. AHP subsidies will be used for eligible costs
5. Retention
6. Project sponsor qualifications
7. Compliance with fair housing laws and regulations
8. Additional District FHLBank eligibility requirements – an FHLBank may require projects to meet one or more of the following additional eligibility requirements:

• The project is located in the FHLBank’s District

• The member institution submitting the application has made use of a FHLBank credit product, other than AHP or CIP, within the previous 12 months

• The amount of subsidy requested does not exceed limits established by the FHLBank as to maximum amounts of AHP subsidy per member, per project, or per project unit.

A project must meet all of the eligibility requirements in order for the application to be scored by the FHLBank.

Scoring Criteria

Under the competitive application process, the AHP operates as a series of 12 District-wide competitions. Each FHLBank designs its own 100-point scoring system based upon the 9 scoring criteria identified in the AHP regulation. Each of the 9 scoring criteria identified in the regulation must be allocated a minimum of 5 points, with the exception of targeting, which must receive a minimum of 20 points.

The following are the 9 scoring criteria for AHP subsidies:

1. Use of donated government-owned or other properties
2. Sponsorship by a not-for-profit organization or government entity
3. Targeting
4. Housing for homeless households
5. Promotion of empowerment
6. First District Priority -- The FHLBank may choose one or more of the following criteria: special needs, community development, first-time homebuyers, member financial participation, disaster areas, rural, urban, economic diversity fair housing remedy, community involvement, lender consortia, in-District projects.
7. Second District Priority -- Projects that meet a housing need defined and recommended by a FHLBank’s Advisory Council and adopted by its Board of Directors.
8. AHP subsidy per unit
9. Community stability

Applications for Funding

The regulations require that applications for AHP subsidy under the competitive application process be sufficient to:

1. Determine whether the proposed project meets the eligibility requirements and
2. Evaluate the application pursuant to the scoring criteria

For members' convenience, application forms are available from the Community Investment Services departments at each FHLBank.

Applications are evaluated to determine eligibility, scored, and ranked by FHLBank staff and approved by the FHLBank’s board of directors.

Reporting Requirements

Under the regulation, members’ and project sponsors’ monitoring responsibilities under the competitive application process differ depending upon whether the project is for owner-occupied or rental housing. Please refer to your local FHLBank for its monitoring requirements.

Application Due Dates

Each FHLBank determines the number of competitive application periods it will have per year and the dates of those application periods. The amount of subsidy available in each period must be comparable.

Amount of Subsidy Available

The amount of AHP funds available per year was set by FIRREA as a percentage of the FHLBanks’ net income in the prior year. Currently the FHLBanks are required to contribute 10 percent of net earnings or $100 million per year, whichever is greater.

The actual allocations were $78.8 million for 1990, $59.9 million for 1991, $50 million for 1992, $50 million for 1993, $90.6 million for 1994, $100 million for 1995, $104.1 million for 1996, and $119.7 million for 1997. The estimated allocation for 1998 is approximately $130 million.

Homeownership Set-Aside Program

Each FHLBank may set aside annually up to the greater of $1.5 million or 15 percent of its required AHP contribution to assist low- and moderate-income households to become homebuyers.

Under the set-aside program, each FHLBank establishes its own allocation criteria for the AHP funds. The member must provide the AHP funds as a grant, in an amount up to a maximum of $10,000 per household, as established by the FHLBank.

Set-aside funds may be used for downpayments, closing costs, or rehabilitation assistance, or counseling costs in connection with a household’s purchase or rehabilitation of an owner-occupied unit.

Households must meet the following criteria in order to be eligible to receive AHP set-aside funds:

• Low- to moderate-income

• Complete a homebuyer or homeowner counseling program

• Meet other eligibility criteria established by the FHLBank.

A housing unit purchased or rehabilitated with AHP set-aside funds must be subject to a 5-year retention agreement.

Technical and Application Assistance

FHLBank staff members are available to provide technical assistance to members, not-for-profits, and other community-based sponsors in the development of plans to use AHP funds.

Applications should be submitted to the FHLBanks. A list of the FHLBanks' Community Investment Officers (CIOs) and their phone numbers is located on this page.

For additional specific information regarding the submission and/or preparation of AHP applications, please contact the FHLBanks' CIOs.

For additional information contact the Federal Housing Finance Board’s Office of Policy at 1777 F Street N.W., Washington, D.C. 20006.

Richard Tucker

Deputy Director

Compliance Assistance Division

Office of Policy

(202) 408-2848

FHLBank CIOs

FHLBank of Boston (CT, MA, ME, NH, RI, VT)

David Parish (617) 330-9872

FHLBank of New York (NJ, NY, PR, VI)

Joseph Gallo (212) 441-6824

FHLBank of Pittsburgh (DE, PA, WV)

James Chaney (412) 288-3407

FHLBank of Atlanta (AL, DC, FL, GA, MD, NC, SC, VA)

Robert Warwick (404) 888-8435

FHLBank of Cincinnati (KY, OH, TN)

Carol Peterson (513) 852-7615

FHLBank of Indianapolis (IN, MI)

Frederick Hash (317) 465-0428

FHLBank of Chicago (IL, WI)

Charles Hill, Sr. (312) 565-5705

FHLBank of Des Moines (IA, MN, MO, ND, SD)

Curt Heidt (515) 281-1175

FHLBank of Dallas (AR, LA, MS, NM, TX)

Criss Murdoch (214) 944-8636

FHLBank of Topeka (CO, KS, NE, OK)

Christopher Imming (913) 233-0507

FHLBank of San Francisco (AZ, CA, NV)

James Yacenda (714) 633-1271

FHLBank of Seattle (AK, GU, HI, ID, MT, OR, UT, WA, WY)

Judith Dailey (206) 340-8708

National Totals for Active and Completed Projects through
June 30, 1997

Under the competitive application process:

1. Total AHP funds made available to active and completed projects to date amount to $573.9 million.

• There are 4,126 active and completed projects

• The $573.9 million in AHP subsidies approved will leverage $9.3 billion in total development costs, for a leveraging ratio of 16.2 to 1.

2. A total of 147,237 units of housing will be financed. Of these:

• 68 percent will be rental units

• 32 percent will be ownership units

3. Of the total units, 69 percent are for very low-income households. Of these:

• 73 percent will be rental units

• 27 percent will be ownership units

4. Projects include:

• 2,201 new construction projects

• 1,802 rehabilitation projects

• 1,623 acquisition without rehabilitation projects.

5. A total of 575 of the projects will use government-owned properties.

6. Other funding sources used on these projects include:

• $1.8 billion in Low-Income Housing Tax Credits

• $766 million in State housing bonds

• $874 million in grants from State and local government program

• $674 million from various HUD programs

• $309 million in other grants

• $83 million from foundations.

7. Rural projects:

• 26 percent of the applications were for rural housing projects

• 19 percent of the total units included rural housing units.

8. Average subsidy per unit: $3,853.

9. Single-room-occupancy projects:

• 738 applications included single-room-occupancy units.

10. Projects for the handicapped:

• 1,595 applications included units for the handicapped.

11. Homeless:

• 35 percent of the applications included units for the homeless.

12. Housing for the elderly:

• 19 percent of the applications included units for the elderly

• 16 percent of the total units included units for the elderly.

13. Almost 97 percent of the projects have a nonprofit or government sponsor.

14. The average period the housing will remain affordable is 39 years for rental housing and 24 years for owner units.

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