FHFA Proposes Revisions to Federal Home Loan Bank Membership Eligibility Requirements
The Federal Housing Finance Agency ("FHFA") proposed revisions to the eligibility requirements for financial institutions that apply for and retain membership in one of the twelve Federal Home Loan Banks ("FHLBs").
The revisions would, among other things:
- require each applicant and member institution to hold one percent of its assets in "home mortgage loans" to satisfy the statutory requirement that an institution make long-term home mortgage loans;
- define the term "insurance company" to exclude from FHLB membership captive insurers, but permit existing captive members to remain as FHLB members for five years with certain restrictions on their ability to obtain advances;
- require a FHLB to obtain and review an insurance company's audited financial statements when considering it for FHLB membership; and
- clarify the standards by which an insurance company's "principal place of business" is to be identified.
According to FHFA, the proposed rule would make certain that members maintain a commitment to housing finance, as well as ensure that only eligible entities can gain access to FHLB advances and the benefits of membership. Comments on the proposal will be due within 60 days of the rule's publication in the Federal Register, which is expected shortly.