CHLA Supports FHFA Plan To Streamline FHLB Activities Approval

The Community Home Lenders of America (CHLA) last week sent a letter to the Federal Housing Finance Agency (FHFA) commenting on FHFA’s proposal to streamline approval of new Federal Home Loan Bank (FHLB) activities:

The CHLA letter made three main recommendations regarding the FHFA proposal:

(1) Maintaining appropriate guardrails around significant new activities.

(2) Expand FHLBank membership and liquidity access to Independent Mortgage Banks.

(3) Ensure that continued membership remains meaningfully connected to ongoing mortgage lending activity.

“CHLA supports giving the FHLBanks greater operational flexibility,” the CHLA letter said in calling for guardrails.  “However, that flexibility should not result in the expansion of activites that could create unnecessary risk to the System or blur the distinction between the FHLBanks and the Fannie Mae/Freddie Mac.”

In explaining these concerns, CHLA reiterated opposition to any proposals to allow the FHLBs to directly purchase loans, the primary activity of Fannie Mae and Freddie Mac.

CHLA also continued to question the exclusion of IMBs from FHLB membership, stating that “this is difficult to reconcile with the modern structure of U.S. mortgage finance” – and noting that IMBs originate 84% of mortgage loans.

Finally, CHLA urged the FHLBs to concentrate their activities on mortgages.