The regulator of the Federal Home Loan Banks is proposing to make some changes to membership eligibility requirements.
The proposal by the Federal Housing Finance Agency is intended to ensure ongoing commitment to housing finance while restricting eligibility.
Under current FHFA rules, prospective members are required to hold a nominal amount of home mortgage loans on their balance sheets at the time of the membership application.
FHFA is proposing to require members of the 12 FHLBs to hold at least 1 percent of their assets in residential loans.
In addition to being required up front, the mortgage concentration requirement would be expanded to an ongoing requirement.
A quantitative test would be established for determining eligibility.
Some FHLB members are subject to a 10 percent residential mortgage loan requirements at application. FHFA proposes to make this an ongoing requirement.
FHFA wants to exclude captive insurers from FHLB membership. This would be done over a five-year sunset process.
Insurance companies that do qualify for membership would be defined as, “a company that has as its primary business the underwriting of insurance for nonaffiliated persons. This would continue to include traditional insurance companies but would effectively exclude captive insurers from membership and prevent entities not eligible for membership from gaining access to bank advances through a captive insurer.”
The regulator additionally wants standards clarified about determining an insurance company’s principal place of business for the purpose of identifying the correct FHLB district.
Comments can be submitted online at www.fhfa.gov.
