Dec 8 -- The Federal Housing Finance Agency (FHFA) invites public comments to OMB by January 9, 2023 on an information collection titled the “Affordable Housing Program."
Section 10(j) of the Federal Home Loan Bank Act (Bank Act) requires FHFA to promulgate regulations under which each of the 11 Federal Home Loan Banks (Banks) must establish an Affordable Housing Program (AHP) to provide subsidy to the Bank's member institutions to finance: (1) homeownership by households with incomes at or below 80 percent of the area median income (low- or moderate-income households); and (2) the purchase, construction, or rehabilitation of rental housing in which at least 20 percent of the units will be occupied by, and affordable for, households with incomes at 50 percent or less of the area median income (very low-income households). Section 10(j) also establishes standards and requirements for providing such subsidized funding to Bank members and requires each Bank to contribute 10 percent of its previous year's net earnings to its AHP annually, subject to a minimum annual combined contribution by the 11 Banks of $100 million.
FHFA's AHP regulation, which implements the statutory AHP requirements, is set forth at 12 CFR part 1291. The regulation requires that each Bank establish and fund an AHP and sets forth the parameters within which the Banks' programs must operate. The regulation permits the Banks a degree of discretion in determining how their individual programs are to be implemented and requires that each Bank adopt an AHP Implementation Plan setting forth the specific requirements for that Bank's program.
The AHP regulation requires each Bank to establish a General Fund, which is a competitive application program under which the Bank accepts applications for AHP subsidized advances or direct subsidies (grants) submitted by its members on behalf of non-member entities having a significant connection to the projects for which subsidy is being sought (project sponsors). The AHP regulation also authorizes each Bank, in its discretion, to establish, on a phased-in basis, up to three Targeted Funds, which are competitive application programs under which funds are targeted to address specific affordable housing needs within the Bank's district that are either unmet, have proven difficult to address through the Bank's General Fund, or align with the objectives identified in the Bank's strategic plan. Each Bank accepts applications for AHP subsidy under its competitive application program(s) during a specified number of funding periods each year, as determined by the Bank. A Bank must determine for each application it receives whether the proposed project meets applicable AHP regulatory eligibility requirements. The Bank must score each application according to AHP regulatory and Bank-specific scoring guidelines, and approve the highest scoring projects within that funding period for AHP subsidy.
The regulation provides that, prior to each disbursement of AHP subsidy for a project approved under a Bank's competitive application program(s), the Bank must verify that the project continues to meet applicable AHP regulatory eligibility requirements, as well as all commitments made in the approved AHP application. As part of this process, Banks typically require that the member and project sponsor provide documentation demonstrating continuing compliance. In the event of project noncompliance, a project sponsor is required to make a reasonable effort to cure the noncompliance within a reasonable period of time.
If the project sponsor cannot cure the noncompliance within a reasonable period of time, the regulation permits a Bank to approve a modification to the terms of an approved application that would change the score that the application received for the funding period in which it was originally scored and approved, had the changed facts been operative at that time. Before a Bank approves a modification: (i) the project, incorporating the changes, must continue to meet the regulatory eligibility requirements; (ii) the application, as reflective of the changes, must continue to score high enough to have been approved in the funding period in which it was originally scored and approved; and (iii) there must be good cause for the modification, and the analysis and justification for the modification must be documented by the Bank in writing.
The regulation requires generally that a Bank monitor owner-occupied and rental projects receiving AHP subsidy under its competitive application program(s) prior to and after project completion. During the initial monitoring period, a Bank must determine whether the project is making satisfactory progress towards completion, in compliance with the commitments made in the approved application, Bank policies, and applicable AHP regulatory requirements. Following project completion, the Bank must determine whether satisfactory progress is being made towards occupancy of the project by eligible households. Within a reasonable period of time after project completion, the Bank must determine whether the project meets applicable AHP regulatory requirements and the commitments made in the approved application. During the long-term 15-year monitoring period for rental projects, subject to certain exceptions in the AHP regulation, the Bank must determine whether the household incomes and rents in the project comply with the income targeting and rent commitments made in the approved application. For both the initial and long-term monitoring, a Bank must review appropriate documentation maintained by the project sponsor.
The AHP regulation also authorizes each Bank, in its discretion, to allocate up to the greater of $4.5 million or 35 percent of its annual required AHP contribution to establish homeownership set-aside programs for the purpose of promoting homeownership for low- or moderate-income households. Under these homeownership set-aside programs, a Bank provides AHP direct subsidies to its members who, in turn, provide the subsidies as grants to eligible households for down payment, closing cost, counseling cost or rehabilitation assistance in connection with the household's purchase of a primary residence or rehabilitation of an owner-occupied residence. Prior to the Bank's disbursement of a direct subsidy under its homeownership set-aside program(s), the member must agree that the subsidy will be provided in compliance with all applicable AHP regulatory eligibility requirements.
FHFA's Data Reporting Manual (DRM) requires each Bank to submit to FHFA aggregate AHP information. Specifically, the DRM requires each Bank to submit to FHFA project-level information regarding its competitive application program(s) and household-level information regarding its homeownership set-aside program(s) semi-annually. The information the Banks are required to submit to FHFA under the DRM is derived from the documentation submitted by Bank members and project sponsors that is described above.
The Banks use the AHP information collected from Bank members and project sponsors to determine whether: (1) projects for which Bank members and project sponsors are seeking subsidies under the Banks' competitive application programs satisfy the applicable statutory and regulatory requirements and score highly enough in comparison with other applications submitted during the same funding period to be approved for AHP subsidies; (2) projects approved under the Banks' competitive application programs continue to meet the applicable AHP regulatory requirements and comply with the commitments made in the approved applications each time AHP subsidy is disbursed by the Banks, through their members, to the project sponsors; (3) requests for modifications of projects approved under the Banks' competitive application programs meet the AHP regulatory requirements for approval; (4) during the initial monitoring period, projects approved under the Banks' competitive application programs are making satisfactory progress towards completion, are making satisfactory progress towards occupancy of the projects by eligible households after completion, and, within a reasonable period of time after completion, are in compliance with the commitments made in the approved applications, Bank policies, and applicable AHP regulatory requirements; (5) during the long-term 15-year monitoring period, completed rental projects continue to comply with the household income targeting and rent commitments made in the approved applications; and (6) applications for direct subsidy under Banks' homeownership set-aside programs were approved, and the direct subsidies disbursed, in accordance with applicable AHP regulatory requirements.
FHFA uses the information required to be submitted by the Banks under the DRM to verify that the Banks' funding decisions, and the uses of the funds awarded, were consistent with statutory and regulatory requirements.
AHP:
https://www.fhfa.gov/PolicyProgramsResearch/Programs/AffordableHousing/Pages/default.aspx
FHFA submission to OMB:
https://www.reginfo.gov/public/do/PRAViewICR?ref_nbr=202212-2590-001 Click on IC List for questionnaire, View Supporting Statement for technical documentation. Submit comments through this site.
FR notice inviting public comment:
https://www.federalregister.gov/d/2022-26707
For AEA members wishing to submit comments, "A Primer on How to Respond to Calls for Comment on Federal Data Collections" is available at
https://www.aeaweb.org/content/file?id=5806