PUBLISHED BY:

Federal Deposit Insurance Corporation

550 17th Street, NW, Washington, DC 20429 

877-ASK FDIC (877-275-3342)

The Federal Deposit Insurance Corporation (FDIC) does not endorse the programs described in this publication or 

any particular approach to their use. The overviews and program information included in this Guide are designed 

to illustrate the broad range of options available to financial institutions. Each institution is responsible for assessing 

whether the resources presented here are appropriate for the bank to pursue given factors such as the institution’s 

existing mortgage, Community Reinvestment Act, or community development strategies, as well as business focus, 

financial condition, and market. 

When citing this publication, please use the following: 

Affordable Mortgage Lending Guide, Part III: Federal Home Loan Banks (Washington, DC: Federal Deposit 

Insurance Corporation, 2017), https://fdic.gov/mortgagelending. 
• 

AFFORDABLE MORTGAGE 

LENDING GUIDE 

A Resource for Community Bankers 

Part Ill: Federal Home Loan Banks 

FDII 

TABLE OF CONTENTS

About This Publication..........................................................................................................1

Federal Home Loan Bank System .......................................................................................5

Overview: Doing Business with the Federal Home Loan Banks ................................5

Affordable Housing and Community Investment Programs...........................................9

Overview............................................................................................................................9

Affordable Housing Competitive Funding Program................................................. 11

Homeownership Set-Aside Program .......................................................................... 15

Homeownership Set-Aside Specialized Programs ................................................... 19

Community Investment Program ................................................................................ 25

Advances ............................................................................................................................. 29

Mortgage Partnership Finance® Program (MPF®)......................................................... 33

MPF Overview................................................................................................................ 33

Credit Enhanced Products............................................................................................ 37

MPF Original ............................................................................................................. 39

MPF 125..................................................................................................................... 43

MPF 35 ....................................................................................................................... 45

Non-Credit Enhanced Products................................................................................... 47

MPF Xtra..................................................................................................................... 49

MPF Direct................................................................................................................. 51

MPF Government...................................................................................................... 52

MPF Government MBS ............................................................................................ 53

Mortgage Purchase Program (MPP)................................................................................ 55

Mortgage Purchase Program Overview ..................................................................... 55

Programs beyond the Scope of this Guide..................................................................... 57

FDIC’s Community Affairs Program................................................................................. 59

Glossary & Terms ................................................................................................................ 61

Appendix A: FHLB Summaries ......................................................................................... 64
 

ABOUT THIS PUBLICATION
 

Economic Inclusion and Opportunity 

Mortgage lending is an important element of many 

community banks’ business strategies. Community 

banks offer mortgage products and services designed 

to meet the particular needs of their communities, 

including rural areas and low- and moderate-income 

(LMI) borrowers. Offering affordable mortgage loans 

to a wide range of customers deepens bank-customer 

relationships and provides an important pathway for 

borrowers to own their own homes and build wealth. 

At the Federal Deposit Insurance Corporation (FDIC), 

we recognize that mortgage lending is also an important way for insured institutions to promote access and 

participation in the mainstream banking system. Broad 

participation in the products and services offered by 

insured institutions promotes stability and confidence 

in the financial system, which is the core mission of 

the FDIC. 

Many banks, including community banks, seek 

opportunities to serve the particular mortgage credit 

needs of their communities. The Affordable Mortgage 

Lending Guide,Part III: Federal Home Loan Banks1 

(Guide) provides information to help make community 

bankers aware of a wide range of affordable mortgage 

products available from the Federal Home Loan 

Banks (FHLBs). 

Outreach and Communication 

To determine how the FDIC could contribute to efforts 

by banks to offer prudently underwritten, affordable, 

and responsible mortgage credit for LMI households, 

FDIC met with community banks individually and in 

small roundtables. Bankers provided valuable insights 

into the need for affordable mortgage credit in the 

communities they serve. 

Some bankers described how they have harnessed 

federal programs, sometimes in combination with 

other financial mechanisms like Federal Home Loan 

Bank products and State Housing Finance Agency programs, to expand their capabilities and serve a broader 

customer base. Many bankers had relationships with 

neighborhood housing counseling organizations, 

which help provide financial education to 

potential customers. 

At the same time, some bankers noted that very small 

banks do not have specialized staffing or departments 

to offer complex mortgage products and feel that 

the risk and cost of origination is not worth taking 

without more resources or additional risk mitigation. 

Some bankers said that while they want to be involved 

in mortgage lending, it is difficult to find the time to 

research potential products and programs, and that it 

is challenging to find and retain trained mortgage staff, 

especially in rural areas. 

While the majority of FDIC-supervised banks are 

members of an FHLB, some are not members and 

some that are do not take advantage of the products 

and services provided by the FHLBs to support 

affordable mortgage lending. 

From these meetings, we concluded that community 

banks might benefit from a practical reference tool 

to learn about FHLB products so they can make an 

informed decision about which products are the right 

fit for their business plans and strategies to improve 

lending options for their communities. In addition, 

the experience of other lenders that have found ways 

to harness these resources can provide practical 

1 See Affordable Mortgage Lending Guide, Part I: Federal Agencies and 

Government Sponsored Enterprises (Washington, DC: Federal Deposit 

Insurance Corporation, 2016), https://fdic.gov/mortgagelending for a complete list of loan products. Also see Affordable Mortgage Lending Guide, Part II: 

State Housing Finance Agencies (Washington, DC: Federal Deposit Insurance 

Corporation, 2016), https://fdic.gov/mortgagelending for a complete list of 

programs and products. 

1 | FDIC | Affordable Mortgage Lending Guide 
 

 

examples that may be instructive to institutions considering these opportunities. 

Scope and Coverage 

The Guide describes products from the FHLB System. 

The Guide focuses on liquidity access products, as well 

as the affordable housing grant programs provided 

by the FHLBs, which can facilitate mortgage lending 

by insured depository institutions. It covers programs 

that are targeted to a wide variety of communities and 

individuals including rural, Native American, low- and 

moderate-income, and veterans. 

Suggestions for How to Use This Guide 

Community banks can use this Guide to gain an 

overview of a wide variety of products, compare different products, and to help identify the next steps for 

participation with the FHLBs. Community banks can 

use this Guide in conjunction with FDIC’s Affordable 

Mortgage Lending Guide, Part I: Federal Agencies and 

Government Sponsored Enterprises and Affordable 

Mortgage Lending Guide, Part II: State Housing Finance 

Agencies to identify a set of options that best meet an 

institution’s needs. 

Each section provides an overview of the product, its 

purpose, and identifies potential benefits and challenges for community banks. Information is provided 

on several products offered by the FHLBs including 

the variety of Affordable Housing Programs and the 

Community Investment Program. There is also a discussion about advances, the credit enhanced and 

non-credit enhanced options provided through the 

Mortgage Partnership Finance® Program, as well as 

the Mortgage Purchase Program offered by two of 

the FHLBs (Indianapolis and Cincinnati). In addition, 

for each FHLB, we provide a separate summary of the 

products and services provided at the end of the Guide 

in “FHLB Summaries” along with contact information 

and web links. 

A quick review of a product’s overview will help you 

identify whether it is suitable for a particular client 

or population that you are trying to serve, such as 

low- and moderate-income borrowers or other hard-toreach populations. The Guide provides the most recent 

information available. Realizing the need for accurate 

TIPS ON USING THE AFFORDABLE 

MORTGAGE LENDING GUIDE, PART III: 

FEDERAL HOME LOAN BANKS 

• Review the individual FHLB summary for

your FHLB at the back of the publication to

determine which products are available.

• Review the “Contents” page for a list of

FHLB products and programs.

• Review the general information about

product options and criteria.

• Review “Resources” to make sure you

have the most up-to-date information on

product criteria.

• Select a product that best suits your needs

and use the FHLB contact information

located in the FHLB Summaries section to

get started.

and timely information, the Guide includes a list of 

web links where you can find updates on each FHLB in 

“FHLB Summaries.” 

Banks discuss working with the FHLBs 

This Guide contains discussions by community banks 

that incorporate FHLB products and programs into 

their overall mortgage lending strategies. These discussions illustrate how bankers have used these tools to 

meet their business objectives. FHLBs’ Homeownership 

Set-Aside Programs, Mortgage Partnership Finance® 

Program, and Mortgage Purchase Programs 

are discussed. 

Supporting strong Community Reinvestment Act 

(CRA) performance 

Affordable mortgage lending, including to low- and 

moderate-income borrowers; to low- and moderateincome census tracts; and to serve people in 

underserved rural communities, on tribal lands, and 

FDIC | Affordable Mortgage Lending Guide | 2 
 

in disaster areas can be responsive ways for financial 

institutions to meet the credit needs of their communities. The products and programs featured in this Guide, 

whether they result in Home Mortgage Disclosure Act 

(HMDA) reportable loans or originations reported by 

another lender, can help lenders reach their business 

objectives in their communities, as well as contribute to 

their CRA performance. 

Conclusion 

In many parts of the country, community banks play an 

important role in meeting the demand for mortgage 

credit. The products and programs outlined in the 

Guide can provide community bankers with additional 

pathways to homeownership opportunities for creditworthy borrowers in their communities, particularly 

those with affordability challenges. These products may 

also represent business opportunities for community 

banks looking for prudent, sustainable financial products to incorporate into their mortgage business line. 

While homeownership continues to be a goal for most 

Americans, many people struggle to gain access to 

affordable homeownership opportunities that will 

enable them to build a stable future for their families. 

Community banks can and do play a valuable role in 

meeting the demand for affordable mortgage credit, 

and we hope this Guide provides useful information to 

assist bankers in considering all the options to serve 

their communities with prudently underwritten and 

affordable mortgage products. 

3 | FDIC | Affordable Mortgage Lending Guide 
 

Visit FDIC’s Affordable Mortgage Lending Center at 

https://fdic.gov/mortgagelending 

FDIC | Affordable Mortgage Lending Guide | 4 
 

OVERVIEW 

Federal Home Loan Bank System 

OVERVIEW 

Structure and Purpose 

The Federal Home Loan Banks (FHLBs) are a system 

of regional member-owned corporations that provide lending institutions with a liquidity resource to 

finance housing and economic development activities. 

Congress established the Federal Home Loan Bank 

system in 1932 as a government sponsored enterprise 

to support mortgage lending and related community 

investment activity in the wake of the Great Depression. 

The FHLBs’ mission is to provide reliable liquidity to 

its member institutions to support housing finance 

and community investment. While the FHLBs’ mission 

reflects a public purpose, all FHLBs are privately capitalized and do not receive federal funding. 

The Federal Housing Finance Agency (FHFA) regulates 

the FHLBs. It is responsible for ensuring that the FHLBs 

operate in a safe and sound manner, are adequately 

capitalized, are able to raise funds in the capital markets, and are held accountable to the FHLBs’ mission. 

The FHFA also establishes housing goals for the FHLBs 

that measure the extent that FHLB programs are serving low- and very low-income families and families 

residing in low-income areas. The FHFA conducts onsite annual examinations and off-site monitoring of the 

FHLBs and the Office of Finance. 

The FHLBs fund themselves primarily by issuing debt 

securities or consolidated obligations through the 

“system” of FHLBs in the capital markets through the 

Office of Finance, which acts as the FHLBs’ agent. 

Although each FHLB is a separate corporate entity with 

its own management and board of directors, the FHLBs 

are jointly and severally liable for all consolidated 

obligation debt. The federal government does not 

guarantee or insure these consolidated obligations. 

However, the FHLBs’ status as a governmentsponsored enterprise enables the FHLBs to raise 

funds at rates slightly above comparable obligations 

issued by the U.S. Department of the Treasury. 

The FHLBs have thousands of members that include 

banks, thrifts, credit unions, insurance companies, and 

community development financial institutions. Of all 

insured lending institutions in the country, members 

represent approximately 80 percent of these institutions. To become a member, a financial institution must 

purchase stock in proportion to its holdings of mortgages and mortgage securities and its assets.2 

Unlike the other government sponsored enterprises, 

Fannie Mae and Freddie Mac, FHLBs do not guarantee or insure mortgage loans. Instead, FHLBs act as 

a “bank to banks” by providing long- and short-term 

loans known as “advances” to their members, as well 

as specialized grants and loans aimed at increasing 

affordable housing and economic development. In 

some cases, FHLBs also provide secondary market outlets for members interested in selling mortgage loans. 

Programs and Coverage 

Located in Atlanta, Boston, Chicago, Cincinnati, Dallas, 

Des Moines,3 Indianapolis, New York, Pittsburgh, San 

Francisco, and Topeka, the 11 Federal Home Loan 

Banks are each separate, government-chartered, 

member-owned corporations governed by a board of 

directors ranging from 14 to 29 directors. 

2 Once an institution becomes a member, its required stock purchases increase 

with its actual borrowings. 

3 On May 31, 2015, the Federal Home Loan Bank of Seattle merged with the 

Federal Home Loan Bank of Des Moines. The institution is headquartered in 

Des Moines and maintains a Western office in Seattle, WA. Covering 13 states 

and three U.S. Pacific territories, it is the largest FHLB in the system in terms of 

membership and geography. 

5 | FDIC | Affordable Mortgage Lending Guide 
 

 

This Guide covers the following FHLB products 

and services:4 

Affordable Housing Program (competitive): Gap 

financing for rental or homeownership projects developed in partnership with community sponsors and 

distributed through a competitive process. 

Affordable Housing Program (homeownership 

set-aside): Non-competitive grants aimed at providing down payment, closing cost, and rehabilitation 

assistance to increase affordable homeownership 

opportunities for member customers distributed 

through a non-competitive allocation or first-come, 

first-served process. 

Community Investment Program: Discounted advance 

capital for community development lending. 

Advances: Short- and long-term credit products ranging from overnight to 30-year funds and including a 

range of fixed and adjustable or floating rate structures, 

primarily offered to assist collateralized banks with 

portfolio mortgage lending. 

Mortgage Partnership Finance® Program: Secondary 

market outlet offered to members of the FHLBs of 

Atlanta, Boston, Chicago, Dallas, Des Moines, New 

York, Pittsburgh, San Francisco, and Topeka. The MPF® 

Program includes conventional product offerings with 

credit risk-sharing execution, as well as conventional 

and government products with non-credit risk-sharing 

execution options. 

Mortgage Purchase Program: Secondary market outlet 

offered to the members of the FHLBs of Cincinnati and 

Indianapolis. The Mortgage Purchase Program includes 

conventional and Federal Housing Administration 

(FHA) product offerings. Members retain credit 

risk on all loans delivered through the Mortgage 

Purchase Program. 

DOING BUSINESS WITH THE FEDERAL 

HOME LOAN BANKS 

Opportunities and Costs of Membership 

FHLBs offer a variety of products and programs to its 

members to help them meet their affordable mortgage 

lending goals. These include grants, below market-rate 

loans, and discounted advances. Community banks 

also receive liquidity and lower-cost funding options 

that would not otherwise be available to them. 

FHLBs are required to set aside portions of their profits 

to re-invest in the communities of their members in the 

form of grants and below market-rate loans through 

Affordable Housing Programs (AHP). Each FHLB administers its own AHP programs designed to address local 

housing needs and provide funding for community and 

economic development. Affordable Housing Program 

grants are awarded through a competitive application process for members working with community 

organizations and housing developers to create rental 

or homeownership opportunities for lower-income 

households. 

The Homeownership Set-Aside program is a noncompetitive program that offers grants for eligible 

member borrowers to fund down payment, closing 

costs, counseling, or rehabilitation costs assistance in 

connection with a household’s purchase or rehabilitation of an owner-occupied home. 

The Community Investment Program (CIP) offers 

discounted advances priced below standard advance 

offerings for qualified community development activities. These offerings can help members meet their 

business development and Community Reinvestment 

Act (CRA) goals for community-oriented and affordable 

housing lending. 

Through membership in the FHLB system, community 

banks also gain access to low-cost funding and liquidity options typically unavailable to individual banks. 

The FHLB system provides its members with a variety 

of funding options including long- and short-term 

advances to help members manage their funding 

needs and provide mortgage-financing options in 

the communities they serve. FHLB advances are typically priced at a small spread over U.S. Department of 

Treasury obligations. The FHLBs also provide secondary market mortgage delivery options for members 

to decrease interest rate, prepayment, and credit risk. 

They also provide a way for members to mitigate their 

interest rate risk through customizable advance terms 

from one day to 30 years. 

4 The FDIC encourages institutions to weigh the costs, benefits, and risks of 

these products and programs prior to participation. 

FDIC | Affordable Mortgage Lending Guide | 6 
7 | FDIC | Affordable Mortgage Lending Guide

FHLBs do not guarantee or insure mortgages. They members in the form of stock dividends or Affordable 

simply lend against collateral. Therefore, if a mortgage Housing Program funded business developthat collateralizes an FHLB advance defaults, the FHLB ment opportunities.

will look to the lender to either post additional collateral or reduce the advance outstanding. This means Bank Eligibility and Application Process

that lenders have to hold some capital buffer to cover All federally insured depository institutions are eligible this risk. to apply for membership with their FHLB. Membership 

Each member must purchase a minimum investment applications can be found on each of the individual 

of stock in the FHLB in proportion to its borrowings FHLB websites, along with application requirements. It 

from the Federal Home Loan Bank, its holdings of is common for prospective members to have extensive 

mortgages and mortgage securities, and its assets. discussions about their applications with FHLB staff. 

Each FHLB has an established minimum investment Membership is geographically determined. Prospective per member and the sum of all stock investments by members may only apply to and become a member all members must be sufficient to maintain the mini- of the FHLB region that represents the location of mum capital requirements for each individual FHLB. their headquarters or primary place of business, even Individual FHLBs may have their own requirements. though some institutions have multiple entities with Some FHLB profits from advances are returned to locations in more than one FHLB region. 

San Francisco

Dallas

Topeka

Des Moines

Chicago

Atlanta

Cincinnati

Pittsburgh

New York

Boston

Indianapolis
 

In addition to being a legal entity in sound financial 

standing with a CRA rating of “satisfactory” or better, 

the prospective member must have the following 

characteristics: 

• Makes long-term home mortgage loans: The

institution either purchases or originates long-term

home mortgage loans. Long-term home mortgage loans are defined as home mortgage loans

with a maturity of five years or more. An institution may also qualify through a mortgage banking

operation or by purchasing and holding mortgagebacked securities.

• 10-Percent Rule: The institution has at least 10

percent of its total assets in residential mortgage

loans. Community Financial Institutions (defined as

FDIC-insured depository institutions with average

total assets over the preceding three-year period

of less than $1.108 billion, adjusted annually) are

exempt from the 10-percent rule.

In addition, the member must purchase a minimum 

investment of stock in the FHLB in proportion to its 

borrowings from the Federal Home Loan Bank, its 

holdings of mortgages and mortgage securities, and 

its assets. Each FHLB sets its own stock thresholds and 

structure, and has an established minimum investment 

per member and the sum of all stock investments by all 

members must be sufficient to maintain the minimum 

capital requirements for each individual FHLB. Further, 

individual FHLBs may have their own requirements. 

FHLB stock may be held as a bank asset. 

System Requirements and Quality Control 

System and quality control requirements vary by type 

of service and by FHLB. For example, the FHLBank 

of Atlanta uses FHLBAccess®, which is a web-based 

system that provides members with online support for 

reports, statements, and other relevant information for 

monitoring account relationships with the FHLB. 

Community banks should check individual FHLB websites for specific requirements (see Resources). 

Training 

Each FHLB offers training opportunities for members to 

learn more about FHLB products and business-related 

opportunities. See individual FHLB summaries for training information offered. 

RESOURCES 

The Council of Federal Home Loan Banks 

http://www.fhlbanks.com 

Federal Home Loan Banks Office of Finance 

http://www.fhlb-of.com 

Supervisory role of FHFA over FHLBs 

https://www.fhfa.gov/SupervisionRegulation/ 

FederalHomeLoanBanks/ 

Federal Home Loan Bank of Atlanta 

http://corp.fhlbatl.com/ 

Federal Home Loan Bank of Boston 

http://www.fhlbboston.com/ 

Federal Home Loan Bank of Chicago 

http://www.fhlbc.com 

Federal Home Loan Bank of Cincinnati 

http://web.fhlbcin.com/Pages/fhlbcin.aspx 

Federal Home Loan Bank of Dallas 

http://www.fhlb.com/ 

Federal Home Loan Bank of Des Moines 

http://www.fhlbdm.com/ 

Federal Home Loan Bank of Indianapolis 

http://www.fhlbi.com/ 

Federal Home Loan Bank of New York 

http://www.fhlbny.com/ 

Federal Home Loan Bank of Pittsburgh 

http://www.fhlb-pgh.com/ 

Federal Home Loan Bank of San Francisco 

http://www.fhlbsf.com/ 

Federal Home Loan Bank of Topeka 

http://www.fhlbtopeka.com/ 

FDIC | Affordable Mortgage Lending Guide | 8 
 

OVERVIEW 

Affordable Housing and Community Investment Programs 

OVERVIEW 

Congress created the AHP grant program in 

the Financial Institutions Reform, Recovery and 

Enforcement Act of 1989. Each FHLB administers 

their own AHP programs, funded with 10 percent 

of the FHLB’s annual net income from the previous 

year’s earnings. Designed to address local housing 

needs, AHP programs provide funding for community and economic development options in addition 

to homeownership and rental housing opportunities. 

Community Investment Programs are discounted 

advances priced below standard FHLB offerings. 

Since this Guide focuses on homeownership, the 

following programs are discussed: 

Affordable Housing Competitive Program: Affordable 

Housing Program grants are awarded through a competitive application process to members working with 

housing developers and/or community organizations 

to create rental or homeownership opportunities for 

lower-income households. 

Homeownership Set-Aside Program: Homeownership 

Set-Aside grant funds are awarded through a noncompetitive program that allocates grant funds to 

members to distribute to eligible homebuyers or 

homeowners to fund down payment, closing costs, 

counseling, or rehabilitation costs assistance in connection with a household’s purchase or rehabilitation of an 

owner-occupied home on a first-come, first-served or 

specific memberallotment basis. 

Community Investment Program: The Community 

Investment Program (CIP) offers discounted advances 

priced below standard advance offerings for qualified community development activities. CIP funds 

help members make loans to enhance community 

economic development activities for low- and moderate-income families and neighborhoods. 

Potential Benefits 

• FHLB affordable housing and community investment programs may help members achieve their

CRA goals.

• FHLB affordable housing and community investment programs may help members enhance their

community outreach and lending to low- and

moderate-income borrowers.

• Some FHLBs offer services designed to complement product offerings such as business

development, financial literacy curriculum, and

CRA training. Check your FHLB summary to find

applicable services offered.

Potential Challenges 

• FHLB affordable housing and community investment programs funding may be limited and is often

very competitive.

9 | FDIC | Affordable Mortgage Lending Guide 
FDIC | Affordable Mortgage Lending Guide | 10

PROGRAMS IN THIS SECTION: 

Affordable Housing Competitive Program:

Affordable Housing Program grants are 

awarded through a competitive application 

process to members working with housing 

developers and/or community organizations to 

create rental or homeownership opportunities 

for lower-income households. 

Homeownership Set-Aside Program:

Homeownership Set-Aside grant funds are 

awarded through a non-competitive program 

that allocates grant funds to members to 

distribute to eligible homebuyers or homeowners to fund down payment, closing costs, 

counseling, or rehabilitation costs assistance 

in connection with a household’s purchase or 

rehabilitation of an owner-occupied home on 

a first-come, first-served or specific memberallotment basis.

Community Investment Program: The 

Community Investment Program (CIP) offers 

discounted advances priced below standard 

advance offerings for qualified community 

development activities. CIP funds help 

members make loans to enhance community 

economic development activities for low- and 

moderate-income families and neighborhoods.

RESOURCES

Atlanta Federal Home Loan Bank Affordable Housing Programs 

http://corp.fhlbatl.com/services/affordable-housing-programs/

Boston Federal Home Loan Bank Affordable Housing Programs 

http://www.fhlbboston.com/communitydevelopment/ahp/index.jsp

Chicago Federal Home Loan Bank Affordable Housing Programs 

http://www.fhlbc.com/ProductsandServices/

CommunityInvestmentsandAffordableHousingPrograms/

GrantPrograms/Pages/federal-home-loan-bank-chicago-communityinvestment-downpayment-plus-program-DPP.aspx

Cincinnati Federal Home Loan Bank Affordable Housing Programs 

https://www.fhlbcin.com/community-investment/

affordable-housing-program/

Dallas Federal Home Loan Bank Affordable Housing Programs 

https://www.fhlb.com/community/Pages/Affordable-HousingProgram.aspx

Des Moines Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbdm.com/affordable-housing-products/

Indianapolis Federal Home Loan Bank Affordable Housing Programs

https://www.fhlbi.com/products-services/communities-and-housing

New York Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbny.com/community/housing-programs/ahp/index.aspx

Pittsburgh Federal Home Loan Bank Affordable Housing Programs

http://www.fhlb-pgh.com/housing-and-community/programs/firstfront-door.html

San Francisco Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbsf.com/community/grant/ahp.aspx

Topeka Federal Home Loan Bank Affordable Housing Programs 

https://www.fhlbtopeka.com/ahp
 

AFFORDABLE HOUSING AND 

COMMUNITY INVESTMENT 

Affordable Housing Competitive Funding Program 

The Affordable Housing Competitive Funding Program provides an opportunity for members to compete for funds 

that helps them partner with local housing providers to develop (purchase, construct, or rehabilitate) affordable 

owner-occupied or rental housing units in their communities. 

BACKGROUND AND PURPOSE 

FHLBs award Affordable Housing Competitive Funding 

Program (AHP Competitive Funding Program) grants 

through a competitive application process for members working with community organizations and 

housing developers to create rental or homeownership 

opportunities for lower-income households. By statute, 

each FHLB sets aside 10 percent of their annual earnings for distribution as equity-like investments, usually 

grants, to its member communities for affordable housing purposes. 

For homeownership projects under the AHP 

Competitive Funding Program, funds must support the purchase, construction, or rehabilitation of 

owner-occupied housing by or for very low-, low-, or 

moderate-income households. Affordability targets 

vary by FHLB. Projects applying for AHP funds for 

homeownership projects need to serve individuals and 

families below 80 percent of the area median income. 

Many FHLBs give preference to projects that serve 

lower-income households, such as those below 50 percent or 60 percent of the area median income. 

Eligible uses of AHP grant funds include the acquisition, construction, or rehabilitation of affordable rentals 

or homeownership units, as well as down payment and 

closing cost assistance. At least 65 percent of the funds 

must be allocated to the AHP Competitive Funding 

Program, in which members partner with project 

sponsor organizations to compete for rental or homeownership project awards. The remaining up to 35 

percent of the funds is allocated on a non-competitive 

basis to assist low- and moderate-income families who 

want to purchase a home. A project sponsor cannot 

apply without the support of an FHLB member. 

The maximum amount awarded per project and allocated per unit varies annually and by FHLB. Assistance 

may be given in the form of below market-rate loans 

or grants if allowed by the FHLB. Typically, the member 

that originates the application must pass the full 

amount of the award on to the project sponsor, and 

awards are made only in the amount necessary to fill 

project-financing gaps. 

Bank Eligibility and Grant Application Process 

Applications are typically accepted for a limited 

period once a year. Members should form relationships with project sponsors and solicit and evaluate 

projects well in advance of the application period. 

Each FHLB publishes an annual Affordable Housing 

Program Implementation Plan that outlines the program guidelines and application process for the year. 

Generally, these can be found under the Affordable 

Housing Program section of the FHLBs’ websites (see 

Resources). 

Applications must meet the threshold requirements 

established by each FHLB. Of the applications meeting 

all threshold requirements, the highest scoring applications are funded until funds are exhausted. The FHLB 

performs an underwriting analysis of the project to 

determine whether the development budget, market 

analysis, and sponsor’s experience make it likely that 

the project will be completed and occupied. The FHLB 

may request additional information from applicant 

members, project owners, and sponsors, as well as 

other material parties involved with a project in order 

to determine whether an application has materially 

complied with the threshold requirements. Changes 

11 | FDIC | Affordable Mortgage Lending Guide 
 

-

-

 

to the project’s location, sponsor, or substantial changes to the budget are 

generally not allowed once an application is awarded funds. 

Award Use 

Awards are for the purchase, construction, or rehabilitation of an 

owner-occupied project by or for very low-, low-, or moderate-income 

households.5 A household must have an income meeting the income 

targeting commitments in the approved AHP application. With the exception of targeting toward special populations described in FHLBs’ AHP 

Implementation Plans, such as first-time homebuyers or veterans, there are 

no other borrower criteria. 

Threshold Requirements 

Compliance with Regulations 

Members must be compliant with the Community Support Regulations,6 

which is a requirement of membership in the FHLB system. Community 

support compliance is determined by a combination of CRA rating (for 

depository institutions), community development financial institution 

accreditation (as applicable), and a demonstrated track record of lending 

to, and explicitly marketing to, first-time homebuyers. Projects must also 

comply with fair housing laws. 

Review by senior management 

Senior management of the member bank must stipulate that a review and a 

satisfactory level of underwriting were conducted. 

Budget, sources, and uses 

The application must include a statement of construction, permanent 

sources of funding, and a development budget. A percentage of the total 

development budget must already be conditionally committed by an 

unrelated third-party funder. The FHLB typically sets limits on common cost 

drivers in residential construction, such as the builder’s overhead and profit, 

project sponsor fee, and soft costs including architecture and engineering 

fees, permits, and financing costs. In addition, projects must typically have 

both hard and soft cost contingency accounts. 

Requirements related to project readiness 

Satisfactory evidence of site control must be provided if the funds are to 

be used to fund new construction and to ensure that if funds are provided 

the project will succeed. Cost specifications for rehabilitation projects are 

required. A hard cost schedule of values and conceptual plans and elevations for any new construction and/or additions to existing building(s) 

must be provided. For homeownership projects, a percentage of the home 

buyers or units must be identified and qualified. Projects are typically 

expected to be funded within three years of the award of AHP funds, with 

the first draw occurring within the first 12 months. 

POTENTIAL BENEFITS 

AHP Competitive grants helps 

members partner with local 

developers and community 

partners to develop or rehabilitate 

affordable rental and/or owner 

ship housing. 

AHP Competitive grants may 

help members achieve their 

Community Reinvestment 

Act goals. 

POTENTIAL CHALLENGES 

The application process can 

require extensive preparation. 

Program funding is limited. 

The approval process is competi 

tive so not all members will get 

funds for which they apply. 

5 Very-low income is no greater than 50 percent of 

area median income; low-income is no greater than 

80 percent of area median income; and moderateincome is income at or below 100 percent of area 

median income. 

6 http://www.ecfr.gov/cgi-bin/text-idx?SID=a4384a1 

fd746c400b19fa3a0fde6b123&node=12:10.0.2.5.4 

6&rgn=div5 

FDIC | Affordable Mortgage Lending Guide | 12 
 

Sponsor qualifications 

The sponsor of an owner-occupied project must be 

integrally involved in the project in order to ensure 

that the maximum reasonable amount of funds directly 

benefits the project’s occupants rather than intermediaries. “Integrally involved” generally means that the 

entity exercises control over planning, project design, 

development, construction, marketing, sales, or any 

other major elements of the project. FHLBs may also 

set their own sponsor qualification requirements. 

Scoring 

Projects are reviewed and accepted based on a scoring 

system. A maximum of 100 points is typically possible 

for each project application. Eligible applications are 

approved in descending order starting with the highest 

scoring application until funds are exhausted or until 

no eligible applications remain. Of those not approved 

for funding, the FHLB will generally designate four 

alternates. If previously committed funds become available, alternates may receive funding. 

Points are typically allocated based on the following 

factors: 

• donated government-owned or other property;

• nonprofit or government project sponsor;

• affordability targeting;

• connection to services or activities that assist

residents in moving toward better economic opportunities;

• targeting for homeless households or other special populations;

• AHP subsidy per unit (less subsidy is preferred);

• community characteristics;

• project readiness;

• other sources of funds leveraged; and

• leveraging financing via the Community Investment

Program or Economic Development Program

advances, or utilizing a Letter of Credit.

Training 

Each FHLB offers training opportunities for members to 

learn more about FHLB products and business-related 

opportunities. See the individual FHLB summary for 

training information offered. 

Quality Control and Reporting 

Beginning after the FHLB’s approval date and continuing until project completion, the sponsor must submit 

to the member and subsequently the FHLB, a report 

about whether reasonable progress is being made 

toward the drawdown of the AHP Competitive subsidy and project completion. The frequency of project 

reporting is at the discretion of the FHLB. After project 

completion, the FHLB reviews the completed project 

to check compliance with program expectations. The 

FHLB will review: 

• whether the subsidy was used for eligible purposes according to the commitments made in the

approved AHP Competitive application;

• whether household income complies with the

income targeting commitments made in the

approved application;

• whether the project’s actual costs were reasonable and customary in accordance with the FHLB’s

project feasibility and cost guidelines, and the

subsidies were necessary for the completion of the

project as currently structured;

• whether the record retention agreement was fully

executed and recorded; and

• whether services and activities promised in the

AHP Competitive application have been provided.

In the event an AHP-assisted unit is sold or refinanced 

in the first five years from the date of closing, a pro-rata 

share of the subsidy, reduced for every year the seller 

owned the unit, must be repaid to the FHLB from any 

net gain on the sale of the unit, unless the unit is resold 

to a very low-, low-, or moderate-income household. 

Repayment of subsidy is not necessary in the event 

of foreclosure. Members must ensure that there is a 

deed restriction or other legally enforceable retention 

mechanism to ensure compliance. 

13 | FDIC | Affordable Mortgage Lending Guide 
 

Potential Benefits 

• AHP Competitive grants helps members partner with local developers and community partners to develop

or rehabilitate affordable rental and/or ownership housing.

• AHP Competitive grants may help members achieve their Community Reinvestment Act goals.

Potential Challenges 

• The application process can require extensive preparation.

• Program funding is limited.

• The approval process is competitive so not all members will get funds for which they apply.

RESOURCES 

FHLB of Atlanta AHP Competitive Funding Program

 http://corp.fhlbatl.com/files/documents/AHP-Competitive-Brochure.pdf

FHLB of Boston Affordable Housing Program 

http://www.fhlbboston.com/communitydevelopment/ahp/index.jsp 

FHLB of Chicago Competitive Affordable Housing Program 

http://www.fhlbc.com/ProductsandServices/CommunityInvestmentsandAffordableHousingPrograms/ 

GrantPrograms/Documents/FHL.371_AHP.ProductSheet_FINAL.01.pdf 

FHLB of Cincinnati Affordable Housing Program 

https://www.fhlbcin.com/community-investment/affordable-housing-program/ 

FHLB of Dallas Annual Grants for Affordable Housing 

https://www.fhlb.com/community/Pages/Affordable-Housing-Program.aspx 

FHLB of Des Moines Competitive Affordable Housing Program 

http://www.fhlbdm.com/affordable-housing-products/competitive-affordable-housing-program/ 

FHLB of Indianapolis Competitive Affordable Housing Program Grants 

https://www.fhlbi.com/products-services/communities-and-housing/competitive-affordable-housing-program 

FHLB of New York Affordable Housing Program 

http://www.fhlbny.com/community/housing-programs/ahp/index.aspx 

FHLB of Pittsburgh Affordable Housing Program 

http://www.fhlb-pgh.com/housing-and-community/programs/affordable-housing-program.html 

FHLB of San Francisco Affordable Housing Program 

http://www.fhlbsf.com/community/grant/ahp.aspx 

FHLB of Topeka Affordable Housing Program 

https://www.fhlbtopeka.com/ahp 

FDIC | Affordable Mortgage Lending Guide | 14 
 

AFFORDABLE HOUSING AND 

COMMUNITY INVESTMENT 

Homeownership Set-Aside Program 

The Homeownership Set-Aside Program uses a portion of an FHLB’s Affordable Housing Program funds for 

down payment and closing costs, and/or rehabilitation cost assistance to low- and moderate-income households 

purchasing a home. 

BACKGROUND AND PURPOSE 

Homeownership set-aside grant funds are distributed 

through a non-competitive process and allocated to 

members on a first-come, first-served basis. These 

programs offer grants for the purposes of increasing 

homeownership opportunities for low- and 

moderate-income (LMI) households. Members obtain 

the AHP set-aside funds from the FHLB and then provide these funds as grants to eligible households. 

Set-aside funds may be used for down payment or 

closing cost assistance, housing counseling, or rehabilitation costs in connection with a household’s purchase 

or rehabilitation of an owner-occupied unit. Up to 35 

percent of the Federal Home Loan Banks’ Affordable 

Housing Program funding may be set aside for noncompetitive awards to support these homeownership 

activities. Individual FHLBs determine the amounts that 

go to each fund and distribution priorities.7 

Funds are available to all current FHLB members in 

good standing. Members apply on a unit-by-unit, 

first-come, first-served basis, for borrowers whose 

loans are in the process of closing or to reimburse 

funds advanced to borrowers. The entire amount of 

the subsidy must be passed on to the homebuyer, 

and some FHLBs require members to offer additional 

assistance, such as reduced fees or mortgage rates 

in order to encourage low- and moderate-income 

homeownership. 

The maximum award per homebuyer varies by FHLB 

from $5,000 to $15,000. FHLBs also generally cap the 

total amount of funds that each member may reserve 

each year or at any one time. Total annual maximum 

allocations per member range from $100,000 to 

$1,000,000. 

Bank Eligibility and Grant Application Process 

Participation in the Homeownership Set-Aside Program 

is designed to be simple for members that are already 

originating mortgage loans. As for all FHLB programs, 

the member must be compliant with Community 

Support Regulations.8 Each FHLB publishes an annual 

Affordable Housing Program Implementation Plan that 

outlines the program guidelines and application process for the year. Generally, these can be found under 

the Affordable Housing Program section of the FHLBs’ 

websites (see Resources). 

There is a one-time setup process where a member 

employee is designated to manage the program. 

This program manager executes all required documentation and has the final approval authority for 

Homeownership Set-Aside Program applications. He 

or she acts as a liaison to communicate and receive 

information and data and respond to inquiries from the 

FHLB. Program managers are encouraged to attend 

annual training and education sessions regarding the 

Homeownership Set-Aside Program. However, submission and approval roles must be separated in order to 

protect the truthfulness and accuracy of all information 

and documents submitted to the FHLB. 

7 Some FHLBs choose to distribute their Homeownership Set-Aside Program 

dollars through specific government and nonprofit community partners rather 

than distribute the funds directly to members to better leverage their community development impact and encourage regional planning. 

8 http://www.ecfr.gov/cgi-bin/text-idx?SID=a4384a1fd746c400b19fa3a0fde6 

b123&node=12:10.0.2.5.46&rgn=div5 

15 | FDIC | Affordable Mortgage Lending Guide 
 

-

Under this program, the homebuyer applies for funding through 

the member. The member submits an application to its FHLB. Upon 

approval, the FHLB issues a conditional commitment, committing 

and reserving funds to the transaction, contingent upon the borrower 

and member meeting all documentation and other procedural program requirements. The period for the transaction to be finalized after 

approval by the FHLB varies from 30 days to two years depending on 

the structure of the program. Purchases supported by a matched savings account are given a longer window. 

Upon approval of required conditional commitment and pre-funding 

documents, the FHLB credits funds to the member’s account. While 

funding is generally provided at the time of the mortgage transaction, 

an FHLB may operate the program with different timing, such as reimbursing a member for down-payment assistance. The member disburses 

funds to the borrower at the time of closing for a purchase product, or 

after work is completed for a rehabilitation product. 

A typical application might require a member to submit and retain on 

file a request for a conditional commitment, a request for disbursement, documentation of the household’s income, and a HUD-1 form 

(see Resources) documenting the sales transaction. In addition, each 

FHLB has a list of documents that the member must retain on file but not 

submit to the FHLB, such as evidence of housing counseling or matching funds. 

Training 

Each FHLB offers training opportunities for members to learn more 

about FHLB products and business-related opportunities. See the individual FHLB summary for training information offered. 

Borrower Eligibility 

Income Limits: At the time of application, the homeowner’s income must 

be below 80 percent of the area median income. 

Owner occupant: The homeowner/buyer must be the owner occupant 

of the home purchased or rehabilitated with Homeownership Set-Aside 

Program funds. 

Homeownership counseling: Homebuyers must complete the sponsoring FHLB’s prescribed homebuyer counseling, debt management 

planning, and default prevention program. 

First-time homebuyer: One-third of total funding is reserved for firsttime homebuyers, generally defined as an individual who has not owned 

a home within the past three years or a single parent or displaced homemaker who has only owned a home with a previous spouse. 

POTENTIAL BENEFITS 

Set-aside funds can help mem 

bers reach new customer markets 

including first-time homebuyers, 

veterans, elderly, and special 

needs customers. 

Set-aside funds can help 

members achieve Community 

Reinvestment Act goals. 

There is minimal paperwork 

required for set-aside programs. 

POTENTIAL CHALLENGES 

Members must pass the entire 

amount of the subsidy on to 

their borrowers. 

FDIC | Affordable Mortgage Lending Guide | 16 
 

Eligible properties: Owner-occupied, one- to four-unit 

family properties, townhouses, condominiums, cooperatives, manufactured, and mobile housing are allowed. 

Minimum down payment/subsidy match: Varies by 

FHLB. See your individual FHLB summary for specific 

programs and requirements. 

Loan Criteria and Subsidy Recapture 

All loans, interest rates, fees, points, and any other 

charges for loans made in conjunction or in association 

with the FHLB’s Homeownership Set-Aside Program 

must comply with all applicable state and federal regulations and may not exceed a reasonable market rate 

for loans of similar maturity, terms, and risk. 

Fixed-rate mortgages are eligible. Adjustable rate 

mortgages are eligible within certain parameters. The 

member qualifies customers based on the maximum 

applicable interest rate (to avoid payment shock if 

there has been a significant increase in interest rates 

between origination and rate reset). Loans must be 

fully amortizing. No negative amortization loans are 

allowed. No interest only or pay options are allowed. 

The loan term must not be less than five years, with an 

amortization of any period equal to or greater than the 

loan term. 

In the event a unit is sold or refinanced in the first five 

years from the date of closing, a pro-rata share of the 

subsidy, reduced for every year the seller owned the 

unit, must be repaid to the FHLB from any net gain on 

the sale of the unit, unless the unit is resold to a very 

low-, low-, or moderate-income household. Repayment 

of subsidy is not necessary in the event of foreclosure. 

Members must ensure that there is a deed restriction 

or other legally enforceable retention mechanism to 

ensure compliance. 

17 | FDIC | Affordable Mortgage Lending Guide 
FDIC | Affordable Mortgage Lending Guide | 18

RESOURCES

HUD-1 Form

http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/forms/hud1

Atlanta Federal Home Loan Bank Affordable Housing Programs

http://corp.fhlbatl.com/services/affordable-housing-programs/

Boston Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbboston.com/communitydevelopment/ahp/index.jsp

Chicago Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbc.com/ProductsandServices/CommunityInvestmentsandAffordableHousingPrograms/

GrantPrograms/Pages/federal-home-loan-bank-chicago-community-investment-downpaymentplus-program-DPP.aspx

Cincinnati Federal Home Loan Bank Affordable Housing Programs

https://web.fhlbcin.com/Housing/Programs/AffordableHousingProgram/Pages/AffordableHousingProgram.aspx

Dallas Federal Home Loan Bank Affordable Housing Programs

https://www.fhlb.com/community/Pages/Affordable-Housing-Program.aspx

Des Moines Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbdm.com/affordable-housing-products/

Indianapolis Federal Home Loan Bank Affordable Housing Programs

https://www.fhlbi.com/products-services/communities-and-housing

New York Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbny.com/community/housing-programs/fhc/fhc-information-for-hlb-member-community-lenders.aspx

Pittsburgh Federal Home Loan Bank Affordable Housing Programs

http://www.fhlb-pgh.com/housing-and-community/programs/first-front-door.html

San Francisco Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbsf.com/community/grant/ahp.aspx

Topeka Federal Home Loan Bank Affordable Housing Programs

https://www.fhlbtopeka.com/ahp
 

AFFORDABLE HOUSING AND 

COMMUNITY INVESTMENT 

Homeownership Set-Aside Specialized Programs 

FHLBs can target their Homeownership Set-Aside Program funding toward special populations, such as first-time 

homebuyers or veterans. FHLBs’ describe these specialized programs in their AHP Implementation Plans. Below is a 

brief description of the programs offered by each FHLB. 

FHLB ATLANTA 

First-time Homebuyer: This program provides up to 

$5,000 in matching funds for the down payment and 

closing costs of first-time homebuyers. 

Community Partners: This program provides up to 

$7,500 in matching funds for down payment and 

closing-cost funding to current or retired law enforcement officers, educators, health care workers, 

firefighters, and other first responders. 

Community Rebuild and Restore: This product provides up to $10,000 in funding for the rehabilitation of 

an existing owner-occupied property located in “Major 

Disaster Declaration” areas as designated by FEMA. 

Foreclosure Recovery: This program provides up to 

$15,000 in matching funds for down payment, closingcost, and rehabilitation funds towards the purchase 

and rehabilitation of an existing home from the Real 

Estate Owned (REO) inventory of an FHLB Atlanta 

member. 

Veterans and Returning Veterans Purchase: This program provides up to $10,000 in funding for a home 

purchase or purchase/rehabilitation to members of any 

branch of the U.S. military or their surviving spouses. 

Veterans and Returning Veterans Rehabilitation: This 

product provides up to $15,000 in funding for energy 

efficient and accessibility improvements to a home 

owned by a veteran or active duty member of any 

branch of the U.S. military or surviving spouse. 

Structured Partnership Product (SPP): This product 

provides funds for eligible purchase and/or 

rehabilitation transactions as defined by the terms and 

conditions of each of the FHLB of Atlanta’s agreements 

with federal, state, or local governmental, quasigovernmental entities, or other organizations to deliver 

AHP-compliant products in collaboration with the FHLB 

of Atlanta. 

FHLB BOSTON 

Equity Builder Program: This program provides up to 

$15,000 for down payment and closing cost assistance, 

homebuyer counseling costs, and/or rehabilitation 

costs to eligible homebuyers. 

FHLB CHICAGO 

Downpayment Plus®: This program provides up to 

$6,000 for down payment and closing cost assistance, 

homebuyer counseling costs (up to $700), and/or 

eligible rehabilitation costs. 

Downpayment Plus Advantage®: This program 

is designed for nonprofits participating in 

homeownership programs. The nonprofit must 

partner with a member to access the program. The 

Downpayment Plus Advantage program provides up to 

$6,000 to eligible households for down payment and 

closing cost assistance, homebuyer counseling costs 

(up to $700), and/or rehabilitation costs. 

19 | FDIC | Affordable Mortgage Lending Guide 
 

-

FHLB CINCINNATI 

Welcome Home: This program provides up to $5,000 for down payment 

and closing cost assistance to eligible homebuyers. 

FHLB DALLAS 

Homebuyer Equity Leverage Partnership Program: This program provides up to $7,000 for down payment and closing costs assistance for 

first-time homebuyers. 

Special Needs Assistance Program: This program provides up to $6,000 

to special needs households for the repair and/or rehabilitation of an 

owner-occupied home for eligible homebuyers. 

Housing Assistance for Veterans Program: This program provides up to 

$7,500 for the necessary modifications to homes of U.S. veterans and 

active-duty personnel who are disabled by active military service since 

September 11, 2001. 

FHLB DES MOINES 

Home$tart: This program provides up to $7,500 for down payment, 

closing costs, counseling, or rehabilitation assistance to eligible 

homebuyers. 

Home$tart Plus: This program provides up to $15,000 for down 

payment, closing costs, counseling, or rehabilitation assistance to 

eligible homebuyers on public assistance. 

Native American Homeownership Initiative: This program provides 

up to $15,000 for down payment, closing costs, counseling, or 

rehabilitation assistance to eligible Native American, Native Alaskan, or 

Native Hawaiian households. 

FHLB INDIANAPOLIS 

Homeownership Opportunities Program: This program provides up to 

$8,000 for down payment and closing costs assistance for eligible firsttime homebuyers. 

Accessibility Modifications Program: This program provides up to 

$15,000 for modifications that assist with aging in place and independent living for eligible senior or disabled homeowners. 

Neighborhood Impact Program: This program provides up to $7,500 

for eligible repairs and maintenance costs including new windows, 

furnaces, water heaters, gutters, and insulation for eligible homeowners. 

FHLB NEW YORK 

First Home Club: This program provides up to $7,500 in matching funds 

for the down payment and closing costs of first-time homebuyers. 

POTENTIAL BENEFITS 

Set-aside funds can help mem 

bers reach new customer markets 

including first-time homebuyers, 

veterans, elderly, and special 

needs customers. 

Set-aside funds can help 

members achieve Community 

Reinvestment Act goals. 

There is minimal paperwork 

required for set-aside programs. 

POTENTIAL CHALLENGES 

Members must pass the entire 

amount of the subsidy on to 

their borrowers. 

FDIC | Affordable Mortgage Lending Guide | 20 
 


 


 

FHLB PITTSBURGH 

First Front Door: This program provides up to $5,000 

in matching funds for the down payment and closing 

costs of first-time homebuyers. 

FHLB SAN FRANCISCO 

Individual Development and Empowerment Account 

(IDEA) Program: This program provides up to $15,000 

in matching funds for the down payment and closing 

costs of eligible first-time homebuyers who have saved 

under an Individual Development Account (IDA) or are 

participating in a family self-sufficiency or lease-to-own 

program leading to homeownership. 

Workforce Initiative Subsidy for Homeownership 

(WISH) Program: This program provides up to $15,000 

in matching funds for the down payment and closing 

costs of eligible first-time homebuyers. 

FHLB TOPEKA 

Homeownership Set-aside Program: This program 

provides up to $5,000 for down payment and closing 

cost assistance, homebuyer counseling costs, and/or 

rehabilitation costs to eligible first-time homebuyers. 

Potential Benefits 

• Set-aside funds can help members reach new

customer markets including first-time homebuyers,

veterans, elderly, and special needs customers.

• Set-aside funds can help members achieve

Community Reinvestment Act goals.

• There is minimal paperwork required for setaside programs.

Potential Challenges 

• Members must pass the entire amount of the subsidy on to their borrowers.

21 | FDIC | Affordable Mortgage Lending Guide 
FDIC | Affordable Mortgage Lending Guide | 22

RESOURCES

Atlanta Federal Home Loan Bank Affordable Housing Programs

http://corp.fhlbatl.com/services/affordable-housing-programs/

Boston Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbboston.com/communitydevelopment/ahp/index.jsp

Chicago Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbc.com/ProductsandServices/CommunityInvestmentsandAffordableHousingPrograms/

GrantPrograms/Pages/federal-home-loan-bank-chicago-community-investment-downpayment-plusprogram-DPP.aspx

Cincinnati Federal Home Loan Bank Affordable Housing Programs

https://www.fhlbcin.com/community-investment

Dallas Federal Home Loan Bank Affordable Housing Programs

https://www.fhlb.com/community/Pages/Affordable-Housing-Program.aspx

Des Moines Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbdm.com/affordable-housing-products/

Indianapolis Federal Home Loan Bank Affordable Housing Programs

https://www.fhlbi.com/products-services/communities-and-housing/competitive-affordable-housing-program

New York Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbny.com/community/housing-programs/fhc/fhc-information-for-hlb-member-community-lenders.aspx

Pittsburgh Federal Home Loan Bank Affordable Housing Programs

http://www.fhlb-pgh.com/housing-and-community/programs/first-front-door.html

San Francisco Federal Home Loan Bank Affordable Housing Programs

http://www.fhlbsf.com/community/grant/ahp.aspx

Topeka Federal Home Loan Bank Affordable Housing Programs

https://www.fhlbtopeka.com/Community-Programs-Grants
 

 

A COMMUNITY BANKER CONVERSATION 

Using FHLBs’ Homeownership Set-Aside Programs

A bank representative from Florida said that his bank 

looks for ways to provide the optimal amount of 

mortgage-related assistance for the veterans they serve 

by taking advantage of the veteran housing loan subsidy programs offered by the FHLB of Atlanta. These 

FHLB Set-Aside Fund programs offer veterans up to 

$15,000 toward down payment, closing costs, principal 

reduction, or rehabilitation assistance for the purchase 

or purchase/rehabilitation of an existing unit, typically 

structured as a forgivable five-year second mortgage 

with no interest or payments. The FHLB veterans’ programs can be used with the VA home loan guarantee 

program or other conventional or portfolio products. 

Another bank representative said that her bank has 

participated in the FHLB of Pittsburgh’s First Front Door 

(FFD) program for several years. This program provides 

up to $5,000 in matching funds (subsidy match is 3:1) 

for the down payment and closing costs of first-time 

homebuyers with an area median income of 80 percent or less. The program requires homeownership 

counseling. The bank uses FFD in conjunction with its 

own program designed for low- and moderate-income 

borrowers. “FFD is valuable to buyers who are strong 

borrowers but are a little short on funds to close. The 

FHLB of Pittsburgh has streamlined the registration 

process, which makes the process from registration to 

funding easier to submit and track.” 

One representative said that her bank combines the 

FHLB of Cincinnati’s Welcome Home program with its 

Federal Housing Administration (FHA) loans through a 

correspondent. Welcome Home provides up to $5,000 

for down payment and closing costs assistance to eligible homebuyers with a minimum subsidy match 

of $500. 

A bank representative from Minnesota discussed the 

Native American Homeownership Initiative (NAHI) 

through the Federal Home Loan Bank of Des Moines’ 

Homeownership Set-Aside program. NAHI provides 

up to $10,000 to offset home purchase costs including 

down payment, closing costs, homeownership counseling, and home repairs. FHLB members may enroll 

and then reserve funds — up to $20,000 at a time — on 

a first-come, first-served basis, subject to availability. 

According to the bank representative, getting started 

with the NAHI program was a “very easy process” 

that only took between a month and six weeks from 

start to finish. There were no costs incurred to offer 

the program other than the loan officer’s time, which 

was minimal. And there was no staff training involved 

since they kept it simple by just having one loan officer 

manage the NAHI program delivery including all NAHI 

applications. 

While the bank originates mortgages, they typically 

do not originate the first mortgages on loans that use 

NAHI funds. Customers using NAHI funds usually want 

a 30-year mortgage, which the bank currently does 

not offer through its portfolio product or a government insured product. “We are a smaller community 

bank. So if we can get our customers better financing 

elsewhere, we are absolutely going to do that.” The 

bank works with partner organizations that offer U.S. 

Department of Housing and Urban Development’s 

(HUD) Section 184 Indian Home Loan Guaranty loans 

or USDA’s Rural Development loans, both natural 

product matches for the NAHI funds. 

23 | FDIC | Affordable Mortgage Lending Guide 
 

Visit FDIC’s Affordable Mortgage Lending Center at 

https://fdic.gov/mortgagelending 

FDIC | Affordable Mortgage Lending Guide | 24 
 

AFFORDABLE HOUSING AND 

COMMUNITY INVESTMENT 

Community Investment Program 

The Community Investment Program offers discounted advances to members, which are priced below standard 

advance offerings for a wide variety of qualified community development activities, including but not limited to 

those enhancing access to mortgage credit. 

BACKGROUND AND PURPOSE 

Through the Community Investment Program (CIP), 

all FHLBs offer discounted advances priced below 

standard advance offerings for qualified community 

development activities. CIP funds help members make 

loans to enhance community economic development 

activities for families and neighborhoods earning up 

to 80 percent of area median income, and to increase 

housing options for families with incomes up to 115 

percent of area median income. 

Although CIP funding targets vary by FHLB, economic development activities may include funding 

for infrastructure improvements, assistance for small 

businesses, and upgrades to community facilities. 

Housing related activities may include the construction 

or permanent financing of rental and homeownership activities, as well as special needs projects. In 

essence, the statutorily required CIP helps lenders 

make loans that might not be possible without such 

funds by reducing the cost and the risk associated with 

making non-conventional loans for community development. Community investment advances are priced 

at the FHLB’s cost of funds for similar maturities plus 

an administrative fee. Maturities and collateral requirements are consistent with those on all FHLB credit 

programs. Prepayment fees may also apply. 

CIP funds may be used for a variety of purposes related 

to enhancing access to mortgage credit, including: 

• originating mortgage loans;

• financing construction;

• participating in a loan consortium;

• making loans to an entity such as a community

development financial institution that makes

loans for eligible housing or economic development initiatives;

• purchasing mortgage revenue bonds or mortgage

backed securities where all the loans meet CIP

requirements; and

• creating a secondary market for loans.

FHLBs offer a variety of credit products known 

as “advances” to meet the short- and long-term 

liquidity needs of their members. FHLB advances 

serve as a funding source for CIP projects and 

a variety of mortgage products, including those 

focused on very low-, low-, and moderate-income 

households. Some FHLB profits from advances are 

returned to members in the form of stock dividends 

or Affordable Housing Program funded business 

development opportunities. 

Maturities range from overnight to 30 years and 

include a variety of fixed and adjustable or floating rate structures. Advances are priced slightly 

over comparable maturity U.S. Department of the 

Treasury bonds. Advances are secured by mortgages held in portfolio and other eligible types of 

collateral that the FHLB holds. More detail is found 

in the Advances section. 

25 | FDIC | Affordable Mortgage Lending Guide 
 

-

Bank Eligibility and Application Process 

The application process is open for members year round. All of the 

projects’ loans must be closed and funds fully disbursed within a period 

beginning three months prior to the CIP funding date and/or ending 

six months after the funding date. FHLB staff is available to help qualify 

projects. A commitment is established when both the Community 

Investment and Credit Services departments approve the application. 

All FHLBs have established minimum recommended advance amounts. 

In addition, all FHLBs have established a maximum per member and 

total amount of available CIP advance funds. A single advance application may be used for multiple purposes. Applications are funded on a 

first come, first served basis. There is no obligation to borrow once a 

commitment has been made, but commitments do expire if not used. 

No matching funds are required. 

Advance products available mirror classic advance products, but are 

offered at lower rates (see Advances section). The cost of funds fluctuates with the FHLB’s cost to obtain capital. 

Training 

Each FHLB offers training opportunities for members to learn more 

about FHLB products and business-related opportunities. See the individual FHLB summary for training information offered. 

Borrower Eligibility 

Community Investment staff are available to assist in determining CIP 

eligibility. To qualify for CIP funding, the eventual beneficiaries of the 

project must meet certain geographic and/or income requirements. 

These requirements vary by FHLB. 

Loan Criteria 

The program does not specify the terms of mortgages made to low- and 

moderate-income homebuyers using CIP advance funds. Unlike the AHP 

program, members do not have to pass the entire amount of the benefit 

along to borrowers, and may charge origination fees. 

CIP advances can also be used in conjunction with the FHLBs’ Affordable 

Housing Programs, the U.S. Department of Housing and Urban 

Development programs, including the Federal Housing Administration 

programs, as well as state and local government and secondary market 

agency programs. Mortgages secured by properties that received CIP 

financing can be delivered through any secondary market channel for 

which they are eligible. 

POTENTIAL BENEFITS 

The Community Investment 

Program offers members the 

lowest cost advances, discounted 

below standard FHLB rates. 

The Community Investment 

Program may help members 

achieve their CRA goals. 

POTENTIAL CHALLENGES 

The FHLB charges an adminis 

trative fee and prepayment fees 

may apply. 

Applications are funded on a first 

come, first served basis. 

FDIC | Affordable Mortgage Lending Guide | 26 
 

 

Quality Control and Reporting 

A member must provide beneficiary data either with 

application submission or shortly after each disbursement of funds for homeownership programs where 

participants may not have been identified in advance. 

The total amount of loans submitted must be equal 

to or greater than the amount of CIP funds advanced. 

Loans may be closed prior to disbursement of the CIP 

funds to the member. 

A single report is required within the commitment 

period. There is no ongoing follow-up monitoring 

required. The data to be reported depends on the 

application type, but loan amount, household income, 

and number of units is typical. Report data is subject to 

final approval by the FHLB. 

Potential Benefits 

• The Community Investment Program offers members the lowest cost advances, discounted below

standard FHLB rates.

• The Community Investment Program may help

members achieve their CRA goals.

Potential Challenges 

• The FHLB charges an administrative fee and prepayment fees may apply.

• Applications are funded on a first come, first

served basis.

27 | FDIC | Affordable Mortgage Lending Guide 
 

Visit FDIC’s Affordable Mortgage Lending Center at 

https://fdic.gov/mortgagelending 

FDIC | Affordable Mortgage Lending Guide | 28 
 

OVERVIEW

Advances 

OVERVIEW 

The primary purpose of the Federal Home Loan Banks 

(FHLBs) is to provide members with liquidity. FHLBs 

offer a variety of credit products known as “advances” 

to meet the short- and long-term liquidity needs of 

their members. FHLB advances serve as a funding 

source for a variety of mortgage products, including 

those focused on very low- and low- and moderateincome households. Advances help members originate 

mortgages that they want to hold in portfolio or sell 

later. Some FHLB profits from advances are returned to 

members in the form of stock dividends or Affordable 

Housing Program funded business development 

opportunities. 

Advances are the most popular products for the 

FHLBs, accounting for approximately 65 percent of 

their balance sheets. The Federal Home Loan Banks 

go to the debt markets several times a day to provide 

their members with funding. The size of the Federal 

Home Loan Bank System allows for flexible structuring of these advances, enabling each member to 

find a funding strategy to meet its needs. Maturities 

range from overnight to 30 years and include a variety of fixed and adjustable or floating rate structures. 

Advances are priced slightly over comparable maturity 

U.S. Department of the Treasury bonds. Advances of 

different terms and different structures are needed for 

different purposes, and the range of options that the 

FHLBs provide assists members in finding a funding 

strategy that is appropriate to their needs. 

Advances are secured by mortgages held in portfolio 

and other eligible types of collateral that the FHLB 

holds. Collateral arrangements vary with member 

credit quality, capacity, and collateral availability, as 

well as the FHLB’s overall credit exposure from the 

member. Each FHLB can require additional or substitute collateral during the life of an advance to protect 

its security interest. Therefore, if a mortgage that 

collateralizes an FHLB advance defaults, the FHLB will 

look to the lender to either post additional collateral or 

reduce the advance outstanding. This means that lenders have to hold some capital buffer to cover this risk. 

The FHLBs cap the amount of advance credit available 

to each member at between 20 and 60 percent of the 

member’s total assets, with some exceptions available 

depending on member creditworthiness. The credit 

limit is typically calculated by dividing the member’s 

total credit obligations to the FHLB by its total assets. 

Each financial institution should carefully review the 

impact of the income stream associated with advances 

as well as the obligations and assess the risks 

and benefits. 

Bank Eligibility and Application Process 

The FHLB Act9 requires that FHLBs obtain and maintain 

collateral from their members to secure the advances 

at the time the advances are originated or renewed. 

Each FHLB sets policies and procedures based on a 

variety of factors. The following is a general overview of 

FHLB advances. 

In order to apply for advances, each member must 

pledge high-quality collateral in proportion to its 

borrowings from the FHLB. The amount of collateral 

required for an advance incorporates a collateral 

discount or “haircut,” which is incorporated into the 

member’s pledge and determined by the FHLB. The 

haircut calculation includes an estimate of the cost to 

sell or liquidate the pledged collateral and the risk of a 

decline in the asset’s value due to market or credit volatility. Because of this haircut, the lending value of the 

collateral exceeds the amount owed to the FHLB. 

To receive an advance, the member must also purchase 

and maintain additional stock10 in its FHLB. This 

minimum stock investment, established by each FHLB, 

9 Federal Home Loan Bank Act, Pub. L. 72–304, 47 Stat. 725. 

10 Each FHLB sets its own stock thresholds and structure. 

29 | FDIC | Affordable Mortgage Lending Guide 
 

-

-

-

serves as security above and beyond the member’s established credit 

limit. FHLB stock may be held as a bank asset. 

Once the FHLB approves the loan request, the bank advances those 

funds to the member, which then lends the funds out for housing and 

economic development activities and projects. 

Collateral11 eligible under statute or regulation to secure new or 

renewed advances includes, but is not limited to: 

• one-to-four family and multifamily mortgage loans (no more than 90

days delinquent) and certain securities backed by these mortgages;

• loans and securities issued, insured, or guaranteed by the U.S.

government (for example, loans backed by the U.S. Department of

Veterans Affairs, the U.S. Department of Agriculture, and the U.S.

Department of Housing and Urban Development) or securities

issued or guaranteed by any U.S. government agency or government sponsored enterprise (GSE) (for example, mortgage-backed

securities issued or guaranteed by Fannie Mae, Freddie Mac, or

Ginnie Mae);

• cash or deposits at the FHLB;

• certain other collateral that is real estate related, provided that the

collateral has a readily ascertainable value and that the FHLB can

hold a security interest in it, such as certain privately issued mortgage-backed securities not otherwise addressed above, second

mortgage loans including home equity loans, commercial real estate

loans, and mortgage loan participations; and

• loans made by community financial institution (CFI) members or

their affiliates, such as small business loans, small farm loans, small

agri-business loans, or community development loans, in each

case fully secured by collateral other than real estate, or securities representing a whole interest in such secured loans, provided

that the collateral has a readily ascertainable value, can be reliably

discounted to account for liquidation and other risks, can be liquidated in due course, and the FHLB can hold a security interest in

the collateral.

There are three methods of pledging collateral that can be assigned to 

a member based on its financial condition: blanket lien status, listing 

status, or delivery status. 

Blanket lien status: Blanket lien status is the least restrictive and is 

generally assigned to lower risk institutions that are pledging loans, not 

securities, as collateral. Under a blanket lien status, the member retains 

possession of the collateral and executes a written security agreement under which the member is required to hold the collateral for the 

benefit of the FHLB. The security agreement covers the majority of the 

POTENTIAL BENEFITS 

Advances provide members with a secure, 

low-cost source of funds. 

The availability of advances in a number of 

short- and long-term structures with maturi 

ties ranging from one day to 30 years may 

give the bank more flexibility in structuring 

its mortgage-lending program than it might 

otherwise have. 

Advances help members to manage interest 

rate and liquidity risk and manage their bal 

ance sheets. 

Advances can help members bring new finan 

cial products to market. 

POTENTIAL CHALLENGES 

Members must have sufficient collateral to 

cover the credit risk on all advances provided 

by the FHLB. 

Members may not exceed maximum credit 

limits for advances (typically calculated by 

dividing the member’s total credit obligations 

to the FHLB by its total assets). 

11 See 12 CFR §1266.7 for a full list of collateral eligible to be pledged to support FHLB advances. 

FDIC | Affordable Mortgage Lending Guide | 30 
 

member’s assets, whether or not they are acceptable 

as collateral. Members must inform their FHLB of any 

material changes to the amount of collateral available. 

The benefit of this method is that advances are tied to 

the general level of assets, not specific collateral, which 

reduces reporting requirements, and gives banks flexibility in seeking, using, and repaying advances. This 

differs from the other methods of pledging, which 

require members to pledge specific eligible collateral. 

Listing status: Under listing status, the member provides listings of loans pledged to its FHLB with detailed 

loan information, such as the loan amount, payments, 

maturity date, interest rate, loan-to-value, collateral 

type, and credit scores. The member retains physical 

possession of the specific collateral pledged to an 

FHLB. From a member’s perspective, the benefit of 

listing collateral in lieu of a blanket lien security agreement is that in some cases the discount or haircut 

applicable to that collateral may be lower than that 

for blanket lien collateral. From an FHLB’s perspective, 

the benefit of listing collateral is that it provides more 

detailed loan information to arrive at a more precise 

valuation of collateral. 

Delivery status: Under delivery status, an FHLB requires 

the member to place physical possession of eligible 

collateral with the FHLB or a third-party custodian to 

secure all outstanding obligations associated with 

advances. Typically, an FHLB would take physical 

possession or control of the collateral if the financial 

condition of the member was deteriorating or if the 

member exceeded certain credit product usage triggers. Delivery of collateral may also be required if 

regulatory action is taken against the member by its 

regulator, indicating inadequate controls or other conditions that would be of concern. 

Training 

Each FHLB offers training opportunities for members to 

learn more about FHLB products and business-related 

opportunities. See the individual FHLB summary for 

training information offered. 

Quality Control and Reporting 

Each FHLB evaluates members based on financial, 

regulatory, and other information, including examination and call reports. Members may also be required to 

provide other financial data regarding the safety and 

soundness of operations. The FHLBs protect against 

credit and other risks by collateralizing all advances. 

Collateral arrangements vary with member credit 

quality and collateral availability, as well as the FHLB’s 

overall credit exposure to the member. Each FHLB 

establishes individual member borrowing by determining the amount it will lend against each collateral type. 

The amounts used in determining lending values are 

updated by each FHLB on a periodic basis, with some 

values updated as frequently as daily (e.g., securities 

collateral may be re-valued daily). An FHLB may conduct periodic collateral field reviews to establish the 

amount it will lend against each collateral type for each 

member, or to make additional adjustments to a member’s pledged mortgage collateral. For instance, if it is 

determined that the pledged collateral on an outstanding advance has dropped in value, the member may 

be required to pledge additional collateral to bring the 

advance to a fully collateralized level needed to secure 

the outstanding pledge. The financial condition of a 

member will generally have a bearing on the frequency 

and degree of collateral reviews and the level of collateralization to secure advances. It also affects the level 

of haircut used in determining the amount of assets 

that are pledged. 

Community Support Requirements 

Members must also be compliant with the Federal 

Housing Finance Agency’s Community Support 

Requirements,12 which establish standards of community investment that each member must uphold 

in order to maintain continued access to FHLB longterm advances (those with maturities over one year). 

Community support compliance is determined by 

12 http://www.ecfr.gov/cgi-bin/text-idx?SID=a4384a1fd746c400b19fa3a0fde6 

b123&node=12:10.0.2.5.46&rgn=div5#se12.10.1290_12 

13 CRA requires the federal financial institution supervisory agencies, in connection with their examinations of certain depository institutions, to assess 

the institutions’ CRA performance. Upon completion of a CRA examination, 

an overall CRA rating is assigned using a four-tiered rating system. These 

ratings are Outstanding, Satisfactory, Needs to Improve, and Substantial 

Noncompliance. In the case of an interstate bank, the federal bank supervisory 

agencies are required by law to evaluate an institution’s CRA performance in 

each state and metropolitan statistical area (MSA) in which it has a branch in 

addition to providing an overall rating for the bank’s performance. See FFIEC at 

http://www.ffiec.gov/craratings/ratings_faq.htm. 

31 | FDIC | Affordable Mortgage Lending Guide 
FDIC | Affordable Mortgage Lending Guide | 32

a combination of the Community Reinvestment Act 

(CRA) rating (for depository institutions),13 and a track 

record of lending to, and explicitly marketing to, firsttime homebuyers. 

Members are required to submit a Community Support 

Statement every two years indicating their most recent 

CRA rating and in some cases, documenting their 

lending activities to first-time homebuyers. A member 

with a CRA rating of “outstanding” or “satisfactory” 

is deemed to meet the CRA requirement. Members 

with CRA ratings of “needs to improve” will be put on 

probation until the following CRA examination, during 

which time members will still have access to long-term 

funding. If the next CRA rating is less than “satisfactory,” (needs to improve or substantial noncompliance), 

access to long-term funding will be restricted. Any 

member with a CRA rating other than “outstanding” 

must also provide specific data (as requested in the 

Community Support Statement) related to its lending 

activities to first-time homebuyers. 

Potential Benefits 

• Advances provide members with a secure, low-cost 

source of funds.

• The availability of advances in a number of shortand long-term structures with maturities ranging 

from one day to 30 years may give the bank more 

flexibility in structuring its mortgage-lending program than it might otherwise have. 

• Advances help members to manage interest rate 

and liquidity risk and manage their balance sheets.

• Advances can help members bring new financial 

products to market. 

Potential Challenges 

• Members must have sufficient collateral to cover 

the credit risk on all advances provided by the 

FHLB. 

• Members may not exceed maximum credit limits 

for advances (typically calculated by dividing the 

member’s total credit obligations to the FHLB by its 

total assets). 

RESOURCES

Federal Home Loan Banks Office of Finance Lending

http://www.fhlb-of.com/ofweb_userWeb/pageBuilder/

home 

Federal Home Loan Banks Office of Finance Lending and 

Collateral Q&A

http://www.fhlb-of.com/ofweb_userWeb/resources/

lendingqanda.pdf

Federal Home Loan Bank of Atlanta credit products 

brochure

http://corp.fhlbatl.com/files/documents/creditproducts-brochure.pdf

Federal Home Loan Bank of Boston advances

http://www.fhlbboston.com/rates/advances/index.jsp

Federal Home Loan Bank of Chicago advances

http://www.fhlbc.com/ProductsandServices/

LiquidityandFunding/Pages/default.aspx

Federal Home Loan Bank of Cincinnati advances

https://www.fhlbcin.com/our-members/credit-services/

advance-programs/

Federal Home Loan Bank of Dallas advances

https://www.fhlb.com/products/Pages/Advances.aspx

Federal Home Loan Bank of Des Moines advances

http://members.fhlbdm.com/advance-rates/

Federal Home Loan Bank of Indianapolis advances

https://www.fhlbi.com/products-services/credit-services

Federal Home Loan Bank of New York advances

http://www.fhlbny.com/business-lines/credit-products.

aspx

Federal Home Loan Bank of Pittsburgh advances 

http://www.fhlb-pgh.com/products-and-services/creditproducts.html

Federal Home Loan Bank of San Francisco advances

http://www.fhlbsf.com/member/default.aspx

Federal Home Loan Bank of Topeka advances

https://www.fhlbtopeka.com/betterrates
 

OVERVIEW 

Mortgage Partnership Finance® Program 

OVERVIEW 

The Mortgage Partnership Finance® Program (MPF®) 

provides access to the secondary market for FHLB 

members that are approved Participating Financial 

Institutions (PFIs).14 The Federal Home Loan Bank of 

Chicago launched the MPF Program in 1997 to provide 

an outlet (other than Fannie Mae and Freddie Mac) for 

PFIs to sell fixed-rate mortgage loans. Today, nine of 

the 11 FHLBs purchase conventional and government 

loans from their PFIs through the MPF Program. (The 

FHLB of Cincinnati and the FHLB of Indianapolis purchase loans from their members through the Mortgage 

Purchase Program). The large majority of financial institutions participating in this Program are small banks or 

thrifts and credit unions with assets of less than $400 

million. The MPF Program provides multiple product 

offerings and execution options for individual PFIs to 

meet their secondary market needs. 

The MPF umbrella includes a variety of fixed-rate 

conventional and government secondary market 

mortgage products. These products are categorized in 

two groups: MPF credit enhanced products, in which a 

PFI shares the credit risk with the FHLB, and non-credit 

enhanced products, in which credit risk is held by or 

transferred to a third-party entity. 

PFIs can choose from a variety of MPF products, each 

with a unique set of product elements. These elements include: 

• product type (conventional, government, or

jumbo);

• shared credit risk structure versus no credit

risk retention;

• amount of credit risk allocation or amount of credit

enhancement fees on loans where some credit risk

is retained;

• loan delivery options (loans committed before or

after closing); and/or

• servicing options (retained in-house, retained with

sub-servicer, or released); and

• servicing remittance type (Actual/Actual, Single

Remittance Actual/Actual, Scheduled/Scheduled).

This Guide covers the following MPF secondary 

market products: 

Credit Enhanced Products 

MPF Original: Secondary market fixed-rate conventional mortgage product purchased by the FHLB and 

held on its balance sheet. Credit risk is shared between 

the FHLB and the PFI. For sharing in the credit risk, PFIs 

are paid a fixed monthly credit enhancement fee, typically 10 basis points. Credit enhancement fee income is 

not impacted by loan performance. Servicing released 

or retained options are available. 

MPF 125: Secondary market fixed-rate conventional 

mortgage product purchased by the FHLB and held 

on its balance sheet. Credit risk is shared between 

the FHLB and the PFI. For sharing the risk, PFIs are 

paid between 6 basis points to 9 basis points credit 

enhancement fee monthly. Credit enhancement fee 

income is impacted by loan performance. Servicing 

released or retained options are available. 

MPF 35: Secondary market fixed-rate conventional 

mortgage product purchased by an FHLB and held 

on its balance sheet. Credit risk is shared between the 

FHLB and the PFI. For sharing in the credit risk, PFIs are 

paid between 9 basis points to 12 basis points credit 

enhancement fee. Credit enhancement fee income is 

impacted by loan performance. Servicing released or 

retained options are available. 

14 The “Acquired Member Assets (AMA) Final Rule For Federal Home Loan 

Bank Investments” changes the definition of PFI to clarify that the PFI may be 

approved to sell AMA loans to an FHLB, but also could be approved (either 

in conjunction with or apart from its role as a seller of loans) to service those 

loans or provide a credit enhancement for them. https://www.fhfa.gov/ 

SupervisionRegulation/Rules/Pages/Acquired-Member-Assets-Final-Rule.aspx

33 | FDIC | Affordable Mortgage Lending Guide 
 

-

 

Non-Credit Enhanced Products 

MPF Xtra: Secondary market product that lets PFIs originate and 

sell closed standard Fannie Mae15 fixed-rate products to the FHLB of 

Chicago, which pools and delivers them to Fannie Mae. 

MPF Direct: Secondary market product that lets PFIs originate and sell 

jumbo loans with no credit risk retention with the FHLB of Chicago selling the loans to jumbo loan investor, Redwood Trust. 

MPF Government: Secondary market product that helps PFIs to sell 

fixed-rate mortgage loans that are insured or guaranteed by U.S. government agencies to an FHLB of Chicago, which holds them in portfolio. 

MPF Government MBS: Secondary market product that helps PFIs sell 

closed fixed-rate mortgage loans that are insured or guaranteed by U.S. 

government agencies to the FHLB of Chicago, which issues securities 

backed by pools of these mortgages that are sold to private investors; 

payments to investors are guaranteed by Ginnie Mae. 

FHLB MPF Product Offerings 

Nine out of 11 FHLBs offer MPF Products to their PFIs: Atlanta, Boston, 

Chicago, Dallas, Des Moines, New York, Pittsburgh, San Francisco, and 

Topeka. (Indianapolis and Cincinnati are not a part of the MPF Program; 

they offer the Mortgage Purchase Program). The table on the following 

page provides information about which products are offered by each 

FHLB. Product details and availability may change over time. Refer to the 

MPF Program’s website for most up-to-date information (https://www. 

fhlbmpf.com/Pages/default.aspx). 

Bank Eligibility and Application Process 

To be eligible to participate in the MPF Program, an FHLB member must 

be a PFI of an FHLB that offers the MPF Program and have experience 

in originating and servicing mortgage loans. Applicants must also have 

the ability to report mortgage loan activity under either an actual/actual 

(single or multi) or a scheduled/scheduled remittance structure.16 

For depository institutions, there is no leverage capital requirement 

(i.e., the banks’ debt to asset ratio is not considered in determining 

eligibility), but the PFI must meet the applicable risk-based capital 

requirements identified in the Basel III Accord.17 

CREDIT ENHANCED PRODUCTS: 

Secondary market fixed-rate conventional 

mortgage product purchased by the FHLB and 

held on its balance sheet. Credit risk is shared 

between the FHLB and the PFI. Servicing 

released or retained options are available. 

MPF Original: PFIs are paid a fixed monthly 

credit enhancement fee, typically 10 basis 

points. Credit enhancement fee income is not 

impacted by loan performance. 

MPF 125: PFIs are paid between 6 basis 

points to 9 basis points credit enhancement 

fee monthly. Credit enhancement fee income 

is impacted by loan performance. 

MPF 35: PFIs are paid between 9 basis points 

to 12 basis points credit enhancement fee. 

Credit enhancement fee income is impacted 

by loan performance. 

NON-CREDIT ENHANCED PRODUCTS: 

Secondary market product. 

MPF Xtra: PFIs originate and sell closed 

standard Fannie Mae fixed-rate products to 

the FHLB of Chicago, which pools and delivers 

them to Fannie Mae. 

MPF Direct: PFIs originate and sell jumbo 

loans with no credit risk retention with 

the FHLB of Chicago selling the loans to 

Redwood Trust. 

MPF Government: PFIs sell fixed-rate mort 

gage loans that are insured or guaranteed by 

U.S. government agencies to an FHLB, which 

holds them in portfolio. 

15 MPF Government MBS: PFIs sell closed See Affordable Mortgage Lending Guide, Part I: Federal Agencies and Government Sponsored Enterprises 

(Washington, DC: Federal Deposit Insurance Corporation, 2016), fixed-rate mortgage loans that are insured or 

https://fdic.gov/mortgagelending for a complete list of loan products. guaranteed by U.S. government agencies to 

16 Actual/actual is a remittance type that requires the servicer to remit only the actual amount of principal the FHLB of Chicago, which issues securities 

and interest collected from the borrower. By contrast, scheduled/scheduled remittances require the servicer backed by pools of these mortgages that are to remit the scheduled principal and interest due whether or not payments are collected from borrowers. sold to private investors and guaranteed by 17 See http://www.federalreserve.gov/bankinforeg/basel/USImplementation.htm. Ginnie Mae. 

FDIC | Affordable Mortgage Lending Guide | 34 
 

REGION 

CREDIT ENHANCED NON-CREDIT ENHANCED 

MPF 

Original MPF 125 MPF 35 MPF Xtra MPF Direct MPF Government 

MPF Government 

MBS 

Atlanta 

Boston 

Chicago 

Dallas 

Des Moines 

New York 

Pittsburgh 

San Francisco 

Topeka 

PFIs must contact their FHLB to request an application 

to participate in the MPF Program. An applicant’s latest 

audited financial statements may be requested as part 

of the application process. 

Loan Delivery 

Loans are delivered according to the terms of a “master 

commitment,” which is a contract between the participating FHLB and the PFI that provides the terms 

under which the PFI will deliver mortgages to the FHLB. 

Master commitments establish the number and dollar 

amount of mortgages that the PFI estimates it will 

deliver to the FHLB over a specified time period, the 

type of remittance used when servicing the loans, and 

whether the PFI intends to retain or sell the servicing 

rights. On credit-enhanced products, the master commitment also defines the credit risk allocation between 

the FHLB and the PFI. 

The eMPF is a secure transactional website that PFIs 

use to execute delivery commitments, obtain rate and 

fee information, and deliver loans (see Resources). 

Servicing Options 

Three servicing options are available under the 

MPF Program: 

Servicing retained in-house: The servicing retained 

in-house option lets PFIs hold the servicing asset and 

retain ownership over the servicing rights of their MPF 

loans. PFIs hold full responsibility for investor and 

regulatory servicing compliance on the loans. Servicing 

the loans in-house helps PFIs to retain their customer 

relationships, as well as the value of the servicing asset 

and the servicing fee income earned. 

Servicing retained sub-servicing: The servicing 

retained sub-servicing option lets the PFI retain ownership and control of the servicing asset and receive 

some servicing fee income while contracting with an 

approved sub-servicer to carry out specific servicing duties. The fees paid to the sub-servicer will vary 

depending on the level of services agreed to by both 

parties. Sub-servicing lets PFIs retain the value of the 

servicing asset, including the net fee income beyond 

that paid to the sub-servicer. Although the sub-servicer 

will be responsible for carrying out some or all of the 

required servicing duties, as the owner of the servicing 

asset, the PFIs will still hold full responsibility for investor and regulatory servicing compliance on the loans. 

35 | FDIC | Affordable Mortgage Lending Guide 
 

Servicing released: The servicing released option lets 

the PFI sell the servicing rights to the loans originated 

under the MPF Program concurrent to the sale of 

the mortgage loan. The servicing released option 

relieves PFIs from all servicing ownership rights and 

responsibilities. 

Training 

MPF University is a free education website dedicated to 

providing instructions and guidance on all aspects of 

the MPF Program. In addition, the MPF University offers 

frequent training webinars on a variety of topics including underwriting, loan delivery, and loan delinquency 

management. The FHLB of Chicago usually conducts 

this training (see Resources). 

Quality Control and Reporting 

In-house quality control program: Each PFI must 

maintain a quality control program for the mortgages 

it originates and services under the MPF Program. The 

PFI’s program must ensure that mortgages conform to 

the MPF Program’s policies, are of a quality acceptable 

to the FHLB and other institutional investors, and 

comply with insurer and guarantor requirements. 

The quality control process must be independent 

of the PFI’s mortgage origination, processing, and 

underwriting processes. 

MPF staff quality control file reviews: The FHLB staff 

will select a sample of delivered loans and perform 

post-funding quality control reviews to verify that each 

loan selected meets the definition of investment quality 

and conforms to the FHLB’s guidelines, policies, and 

PFI representations and warranties18 as described in 

the PFI Agreement. 

After the quality control review is complete, the PFI 

is notified in writing of those mortgages found to be 

deficient. The FHLB, at its sole discretion, may require 

purchase or repurchase by the PFI of a deficient mortgage in accordance with the MPF Guides 

(see Resources). 

18 Representations and warranties are claims that the seller makes in a purchase 

and sales agreement about the nature of the loan and which in turn form the 

basis for due diligence. If lenders are found to violate representations and 

warranties, secondary market entities may force the lender to repurchase the 

loan or may refuse insurance or guarantee claims. 

Potential Benefits 

• The Mortgage Partnership Finance Program provides PFIs with the ability to sell conventional and/

or government mortgage loans and transfer liquidity risk, interest-rate risk, and prepayment risk to

the FHLBs.

• The MPF Program helps PFIs to share (credit

enhanced products) or transfer the credit risk (noncredit enhanced products) of the loans with/to

their FHLB.

• For certain products, the PFI can either retain or sell

servicing rights.

Potential Challenges 

• On credit-enhanced products, the PFI retains the

representations and warranties’ risk for origination.

RESOURCES 

Product parameters are subject to change. See 

individual FHLB summaries to contact your Federal 

Home Loan Bank. 

Mortgage Partnership Finance Program 

https://www.fhlbmpf.com/Pages/default.aspx 

eMPF Website (ID/Password required) 

https://www.fhlb-mpf.com/eMPF/Logon.

aspx?ReturnUrl=/empf

eMPF PFI User Manual 

https://www.fhlbmpf.com/Shared%20Documents/ 

eMPFUserManual.pdf 

MPF Program Guides (you will need to provide 

contact information) 

https://www.fhlbmpf.com 

MPF Webinar Education Calendar 

https://www.fhlbmpf.com/EDUCATION/Pages/MPFWebinar-Calendar.aspx 

MPF University 

https://pemadmin.elliemae.cloud/fhlbc/ 

FDIC | Affordable Mortgage Lending Guide | 36 
 

OVERVIEW

Credit Enhanced Products 

OVERVIEW 

Credit enhanced products require PFIs to share in the 

credit risk of the loans sold under the MPF Program. In 

return for holding a portion of the credit risk, the PFIs 

are paid credit enhancement fees, which provide an 

economic incentive to PFIs to retain credit risk on high 

quality loans. MPF credit enhanced products vary by 

the amount of credit enhancement fee income paid 

to the PFI and whether or not that credit enhancement fee is impacted by loan performance, as well 

as the amount and structure of the shared credit-risk 

arrangement between the PFI and the FHLB. Generally, 

higher levels of credit risk assumed by the PFI equates 

to higher credit enhancement fees paid to the PFI. 

Depending on a PFI’s risk tolerance and collateral 

needs, one product may provide greater benefit over 

another. While the MPF Program offers three distinct 

credit enhanced products, each financial institution 

should carefully review the impact of the income 

stream associated with the product as well as the 

credit enhancement obligations and assess the risks 

and benefits. 

The risk-sharing structures on all three MPF credit 

enhanced products are multi-layered. After accounting 

for any principal the borrower has paid down on the 

loan, loan losses are paid first from any existing primary 

mortgage insurance policy on the property. Mortgage 

insurance is required on all MPF transactions with 

loan-to-values greater than 80 percent. Any remaining losses are divided between the FHLB and the PFI. 

The amount of risk assumed by the FHLB and the PFI 

varies by product. The first layer of losses is absorbed 

by the FHLBs’ “first loss account.” The second layer of 

losses, called the “credit enhancement obligation,” is 

paid by the PFI. Any losses incurred beyond the credit 

enhancement obligation are absorbed by the FHLB. 

The credit enhancement obligation is calculated so 

that the total credit enhancement amount plus the first 

loss account is sufficient to bring the total loss reserves 

for the master commitment to achieve an Acquired 

Member Assets (AMA) investment grade.19 Over time, 

this credit enhancement obligation is recalculated. If 

the newly calculated credit enhancement obligation 

is lower than the remaining obligation, the PFI’s 

credit enhancement obligation is reset to the new, 

lower level. 

The credit enhancement fees paid to the PFI vary by 

loan product and by the total size of the MPF 

delivery contract. 

FHLBs provide three MPF credit-enhanced secondary 

market products, MPF Original, MPF 125, and MPF 35. 

MPF Original: Secondary market fixed-rate conventional mortgage product purchased by the 

FHLB and held on its balance sheet. Credit risk is 

shared between the FHLB and the PFI. For sharing 

the risk, PFIs are usually paid a fixed monthly credit 

enhancement fee, typically 10 basis points. Credit 

enhancement fee income is not impacted by loan 

performance. The first loss account starts at zero 

and builds at 4 basis points of outstanding balance 

each year. Servicing released or retained options 

are available. 

19 The FHFA has issued, “Acquired Member Assets (AMA) Final Rule For 

Federal Home Loan Bank Investments” that makes certain changes to the 

AMA programs. To comply with Dodd-Frank Act mandates that generally bar 

regulatory agencies from incorporating NRSRO credit-rating requirements 

into regulations, the FHLBs are now required to determine and document 

that AMA assets are enhanced at least to an “AMA investment grade,” which 

is a determination made by each FHLB based on documented analysis that 

includes consideration of applicable insurance, credit enhancements, and 

other sources for repayment on the assets. The FHLB must now determine the 

total credit enhancement obligation no later than 30 calendar days after the 

FHLB completes the purchase of an AMA asset. The final rule can be found at 

Federal Register 81 FR 91674 or https://www.fhfa.gov/SupervisionRegulation/ 

Rules/Pages/Acquired-Member-Assets-Final-Rule.aspx

37 | FDIC | Affordable Mortgage Lending Guide 
 

MPF 125: Secondary market fixed-rate conventional 

mortgage product purchased by an FHLB and held 

on its balance sheet. Credit risk is shared between 

the FHLB and the PFI. For sharing the risk, PFIs are 

paid between 6 basis points to 9 basis points credit 

enhancement fee monthly. Credit enhancement fee 

income is impacted by loan performance. The first 

loss account is set at the time of delivery at 100 basis 

points of all loans delivered. Servicing released or 

retained options are available. 

MPF CREDIT ENHANCED PRODUCT COMPARISON 

MPF 35: Secondary market fixed-rate conventional 

mortgage product purchased by an FHLB and held 

on its balance sheet. Credit risk is shared between 

the FHLB and the PFI. For sharing the risk, PFIs are 

paid between 9 basis points to 12 basis points credit 

enhancement fee monthly. Credit enhancement fee 

income is impacted by loan performance. The first 

loss account is set at the time of delivery at 35 basis 

points of all loans delivered. Servicing released or 

retained options are available. 

Credit Credit Enhancement FHLB First Enhancement Fee impacted by Loss Account Fee Amount loan performance 

Starts at zero, builds at 

4 basis points MPF 10 basis points No each year calculated Original on the outstanding

principal balance 

Fixed at 100 basis 

points of all loans MPF 125 6-9 basis points Yes sold under the master 

commitment 

PFI Credit 

Enhancement 

Obligation 

AMA investment 

grade 

AMA investment 

grade less 100 

basis points first

loss account, 

minimum 25 

basis points 

Servicing

Options 

Retained or 

released 

Servicing

Income 

25 basis 

points, if

retained 

25 basis Retained or points, if released retained 

Fixed at 35 basis AMA investment 25 basis 9-12 basis points of all loans grade less 35 Retained or MPF 35 Yes points, if points sold under the master basis points first released retained commitment loss account 

FDIC | Affordable Mortgage Lending Guide | 38 
 

CREDIT ENHANCED PRODUCTS 

MPF Original 

The MPF Original is a secondary market shared credit, fixed-rate conventional mortgage product purchased by the 

FHLB where the FHLB’s share of losses begins at zero and builds to 4 basis points of the outstanding balance each 

year. A fixed credit enhancement fee of 10 basis points is usually paid monthly to the PFI. 

BACKGROUND AND PURPOSE 

MPF Original offers PFIs the ability to originate and existing mortgage insurance policy on the property. 

sell closed, fixed-rate, residential mortgage loans Any remaining losses are divided between the FHLB 

and receive monthly credit enhancement fee income. and the PFI. The first layer of losses is absorbed by the 

Participating FHLBs purchase MPF Original loans and FHLBs’ “first loss account.” 

hold them on balance sheet. The FHLB manages the PFIs are paid a fixed monthly credit enhancement fee liquidity, interest rate, and prepayment risks of the of 10 basis points. Credit enhancement fee income loans while the credit risk is shared between the PFI is fixed and is not impacted by loan losses. Servicing and the FHLB. released or retained options are available. The illustraThe risk-sharing structure is multi-layered. After tion below shows the distribution of income and loss 

accounting for any principal the borrower has paid for PFIs on the MPF Original product. 

down on the loan, loan losses are paid first from any 

MPF ORIGINAL RISK-SHARING STRUCTURE 

PFI credit enhancement income 

Servicing income 

First layer paid by FHLB 

Second layer paid by PFI 

Remaining losses paid by FHLB 

INCOME 

10 basis points fixed fee on outstanding principal balance 

25 basis points servicing fee (if servicing retained) 

LOSSES 

Borrower principal paid 

Private mortgage insurance 

First loss account starts at zero; builds at 4 basis points each year, which is calculated and 

accrued monthly on the outstanding principal balance 

PFI credit enhancement obligation established in the master commitment 

FHLB (remainder of losses) 

39 | FDIC | Affordable Mortgage Lending Guide 
 

-

-

-

Credit risk-sharing structure: Losses over and above those covered 

by the principal paid by the borrower and any applicable mortgage 

insurance on loans with an original loan-to-value ratio greater than 80 

percent are allocated as follows: 

FHLB first loss account: The first loss account is the first layer of loss 

protection for all MPF Original loans. The first loss account starts at 

zero and builds over time. It is calculated and accrued monthly at 

a rate of 4 basis points on the outstanding principal balance of the 

loans in a master commitment. The FHLB will absorb realized losses 

on mortgages covered in the master commitment up to the balance of 

the first loss account. 

PFI credit enhancement obligation: The credit enhancement obligation is the second layer of loss protection for all MPF Original loans. 

Only losses up to the credit enhancement obligation are paid by the 

PFI to bring the total loss reserves to an Acquired Member Assets 

(AMA) investment grade level. The credit enhancement obligation is 

recalculated over time. If the newly calculated credit enhancement 

obligation is lower than the remaining obligation, the PFI’s credit 

enhancement obligation is reset to the new, lower level. 

FHLB: Any losses that exceed the first loss account and the credit 

enhancement obligation under the MPF Original product are 

absorbed by the FHLB.

Credit enhancement fees: Fixed 10 basis points paid monthly to the PFI 

on the outstanding principal balance in the master commitment. 

Remittance Options: Actual/actual, actual/actual single remittance, or 

scheduled/scheduled. 

Servicing Options: Servicing retained or servicing released options. (See 

Servicing Options in Overview for a full description.) 

Servicing Fee: Set fee of 25 basis points paid monthly to owner of servicing rights. 

RESOURCES 

Product parameters are subject to change. See individual FHLB 

summaries to contact your Federal Home Loan Bank. 

MPF Original 

https://www.fhlbmpf.com/PRODUCTS/Shared%20Documents/

MPFOriginal_082715.pdf

POTENTIAL BENEFITS 

MPF Original provides the high 

est potential income of the three 

credit-enhanced MPF products. 

MPF Original provides PFIs with 

the ability to sell conventional 

loans and transfer liquidity, inter 

est rate, and prepayment risk to 

the FHLBs. 

MPF Original lets PFIs share 

the credit risk of the loans with 

their FHLB. 

The PFI receives a fixed monthly 

credit enhancement fee. 

The PFI can either retain or sell 

servicing rights. 

POTENTIAL CHALLENGES 

The PFI retains the represen 

tations and warranties’ risk 

for origination. 

Early defaults are more likely 

absorbed by the PFI when 

compared with other credit 

enhanced products. 

FDIC | Affordable Mortgage Lending Guide | 40 
 

 

A COMMUNITY BANKER CONVERSATION 

Using the FHLB of Pittsburgh’s 

Mortgage Partnership Finance® Program 

The FDIC talked with community bankers about their 

participation in various Federal Home Loan Bank 

programs. The following is an excerpt from one of 

these discussions. 

A bank representative said that her bank has used the 

FHLB of Pittsburgh’s Mortgage Partnership Finance 

Program (MPF) for approximately 14 years. “Because 

we were already a Freddie Mac seller/servicer20 we 

only needed training in the areas of accounting, how to 

handle delinquencies, and guidelines specific to MPF 

underwriting. We were up and running with the program in just a couple of months, if that.” 

The bank uses MPF Original, which is a secondary 

market fixed-rate conventional mortgage product 

purchased by the FHLB and held on its balance sheet. 

The credit risk is shared between the FHLB and the 

bank. For sharing the risk, the bank is paid a fixed 

monthly credit enhancement fee of 10 basis points. 

The bank retains the servicing in-house on these loans 

and reports its mortgage loan activity under the actual/ 

actual remittance structure. 

The bank received one-on-one training from the staff at 

the FHLB of Pittsburgh for underwriting, servicing, and 

accounting. When asked about what a bank interested 

in MPF should know about the program, the representative said that a new user to MPF should have little 

or no issues if they are familiar with secondary market 

lending. MPF is much easier and less complex than 

Fannie Mae or Freddie Mac. However, if a bank has no 

experience with secondary market lending, it would 

have to bring staff up to speed on the underwriting 

guidelines. She said that a loan origination system is a 

must and the availability of an automated underwriting system is required. “We outsource the post-closing 

quality control auditing of our MPF loans. There is a 

pre-closing quality control checklist that is required on 

10 percent of our MPF loans that adds an additional 

step to the process but it is not difficult to do. We have 

a ‘first loss position’ with MPF so we retain some of the 

credit risk on the loans. There is also a stock purchase 

requirement that could pose an issue for some.”21 

The representative stated that because there are no 

loan level pricing adjustments, the MPF Program makes 

it easier to quote pricing and the pricing is competitive. 

“We are able to contact our local Federal Home Loan 

Bank for guidance when necessary for underwriting 

questions.” She went on to say that the underwriting is 

very similar to Freddie Mac’s underwriting. The bank 

submits each loan through Freddie Mac’s automated 

underwriting system, Loan Prospector®, which provides a “feedback message” with specific guidelines. 

The local FHLB staff provides underwriting support 

when needed. 

Participation requirements may very. See individual 

FHLB summaries for contact information. 

20 See Affordable Mortgage Lending Guide: Part I: Federal Agencies and 

Government Sponsored Enterprises (Washington, DC: Federal Deposit 

Insurance Corporation, 2016), https://fdic.gov/mortgagelending for more 

information on Freddie Mac and its products and requirements. 

21 Not all FHLBs require an additional stock purchase for participation. 

See individual FHLB summaries to contact your Federal Home Loan Bank for 

more information. 

41 | FDIC | Affordable Mortgage Lending Guide 
 

Visit FDIC’s Affordable Mortgage Lending Center at 

https://fdic.gov/mortgagelending 

FDIC | Affordable Mortgage Lending Guide | 42 
 

CREDIT ENHANCED PRODUCTS

MPF 125

MPF 125 is a secondary market shared credit risk, fixed-rate conventional mortgage product purchased by the FHLB

where the FHLB’s share of losses is fixed at 100 basis points. Depending on the total dollar volume of the loans 

covered in the MPF agreement, a credit enhancement fee of 6 basis points to 9 basis points is paid monthly to the PFI. 

BACKGROUND AND PURPOSE 

MPF 125 offers PFIs the ability to originate and sell any existing mortgage insurance policy on the propclosed, fixed-rate, residential mortgage loans and erty. Any remaining losses are divided between the 

receive monthly credit enhancement fee income. FHLB and the PFI. 

Participating FHLBs purchase MPF 125 loans and hold PFIs are paid a credit enhancement fee on the out­ them on balance sheet. The FHLB manages the liquid­ standing principal balance of the master commitment. ity, interest rate, and prepayment risks of the loans However, when loan losses occur, credit enhance­ while the credit risk is shared between the PFI and ment fees are redirected to the FHLB until the first loss the FHLB. account is brought back to the maximum amount of 

The risk-sharing structure is multi-layered. The number 100 basis points. Servicing released or retained options 

“125” in the product name refers to the combined total are available on the MPF 125. The illustration below 

amount of basis points set aside for losses by the PFI shows the distribution of income and loss for PFIs on 

and the FHLB. the MPF 125 product. 

After accounting for any principal the borrower has 

paid down on the loan, loan losses are paid first from 

MPF 125 RISK-SHARING STRUCTURE 

PFI credit enhancement income 

Servicing income 

First layer paid by FHLB 

Second layer paid by PFI 

Remaining losses paid by FHLB 

INCOME 

6 to 9 basis points fee paid monthly on outstanding principal balance 

25 basis points servicing fee (if servicing retained) 

LOSSES 

Borrower principal paid 

Private mortgage insurance 

First loss account is 100 basis points of all loans sold under the master commitment 

PFI credit enhancement obligation established in the master commitment, less 25 basis 

points (including first loss account) 

FHLB (remainder of losses) 

43 | FDIC | Affordable Mortgage Lending Guide 
 

-

Credit risk-sharing structure: The following allocation of loss applies 

after any principal the borrower has paid down on the loan and any 

applicable mortgage insurance on loans with an original loan-to-value 

ratio greater than 80 percent: 

FHLB first loss account: The first loss account is the first layer of loss 

protection for all MPF 125 loans. The amount of the first loss account 

is equal to 100 basis points of the funded amount of all the loans 

in a master commitment. The FHLB will absorb realized losses for 

mortgages in the master commitment up to the balance of the first 

loss account. 

PFI credit enhancement obligation: The credit enhancement obligation is the second layer of loss protection for all MPF 125 loans. Only 

losses up to the credit enhancement obligation are paid by the PFI 

to bring the total loss reserves to an Aquired Member Assets (AMA) 

investment grade level, minus 100 basis points. The minimum amount 

of a PFI’s credit enhancement obligation is 25 basis points of the 

funded amount of all the loans in a master commitment. 

The credit enhancement obligation is recalculated over time. If the 

newly calculated credit enhancement obligation is lower than the 

remaining obligation, the PFI’s credit enhancement obligation is reset 

to the new, lower level. 

FHLB: Any losses that exceed the first loss account and the credit 

enhancement obligation under the MPF 125 product are absorbed by 

the FHLB. 

Credit enhancement fees: 6 basis points (9 basis points for a master 

commitment over $15 million) are paid monthly on the outstanding principal balance of the master commitment to the PFI. When a loss occurs, 

credit enhancement fees are recaptured until the first loss account is 

made whole. 

Remittance Options: Actual/actual, actual/actual single remittance, or 

scheduled/scheduled. 

Servicing Options: Servicing retained or servicing released options. (See 

Servicing Options in Overview for a full description.) 

Servicing Fee: 25 basis points paid monthly. 

RESOURCES 

Product parameters are subject to change. See individual FHLB summaries to contact your Federal Home Loan Bank. 

MPF 125 

https://www.fhlbmpf.com/Shared%20Documents/MPF125_

PROVIDER_6_2015FIN.pdf

POTENTIAL BENEFITS 

MPF 125 provides PFIs with the 

ability to sell conventional loans 

and transfer liquidity, interest 

rate, and prepayment risk to 

the FHLBs. 

MPF 125 lets PFIs share the credit 

risk of the loans with their FHLB. 

The PFI receives a monthly credit 

enhancement fee income. 

The PFI can either retain or sell 

servicing rights. 

The FHLB risk obligation is fixed 

at delivery. 

POTENTIAL CHALLENGES 

PFI retains the representa 

tions and warranties’ risk 

for origination. 

Credit enhancement fee income is 

reduced when loan losses occur. 

FDIC | Affordable Mortgage Lending Guide | 44 
 

CREDIT ENHANCED PRODUCTS

MPF 35

The MPF 35 is a secondary market shared credit risk, fixed-rate conventional mortgage product purchased by the 

FHLB where the FHLB share of losses is fixed at 35 basis points. Depending upon the size of the loans, a credit 

enhancement fee of 9 basis points to 12 basis points is paid monthly to the PFI. 

BACKGROUND AND PURPOSE 

MPF 35 offers PFIs the ability to originate and sell any existing private mortgage insurance policy on the 

closed, fixed-rate, residential mortgage loans and property. Any remaining losses are divided between 

receive monthly credit enhancement fee income for the FHLB and the PFI. 

sharing the credit risk with the FHLB. Participating PFIs are paid a credit enhancement fee on the out­ FHLBs purchase MPF 35 loans and hold them on bal­ standing principal balance of the master commitment. ance sheet. The FHLB manages the liquidity, interest However, when loan losses occur, credit enhance­ rate, and prepayment risks of the loans while the credit ment fees are redirected to the FHLB until the first loss risk is shared between the PFI and the FHLB. account is brought back to the maximum amount of 35 

The risk-sharing structure is multi-layered. The number basis points. Servicing released or retained options are 

“35” in the product name refers to the total amount of available on the MPF 35. The illustration below shows 

basis points set aside for losses by the FHLB. the distribution of income and loss for PFIs on the MPF 

35 product. After accounting for any principal the borrower has 

paid down on the loan, loan losses are paid first from 

MPF 35 RISK-SHARING STRUCTURE 

INCOME 

PFI credit enhancement income 9 to 12 basis points fee paid monthly on outstanding principal balance 

Servicing income 25 basis points servicing fee (if servicing retained) 

LOSSES 

Borrower principal paid 

Private mortgage insurance 

First layer paid by FHLB First loss account is 35 basis points of all loans sold under the master commitment 

PFI credit enhancement obligation established in the master commitment; less 35 basis Second layer paid by PFI points (including first loss account) 

Remaining losses paid by FHLB FHLB (remainder of losses) 

45 | FDIC | Affordable Mortgage Lending Guide 
 

-

Credit risk-sharing structure: The following allocation of loss applies 

after borrower equity and any applicable mortgage insurance on loans 

with an original loan-to-value ratio greater than 80 percent: 

FHLB first loss account: The first loss account is the first layer of loss 

protection for all MPF 35 loans. The amount of the first loss account 

is typically equal to 35 basis points of the funded amount of all the 

loans in a master commitment. The FHLB will absorb realized losses 

for mortgages in the master commitment up to the balance of the first 

loss account. 

PFI credit enhancement obligation: The credit enhancement obligation is the second layer of loss protection for all MPF 35 loans. Only 

losses up to the credit enhancement obligation are paid by the PFI 

until the first loss account is made whole. The credit enhancement 

obligation is calculated in an amount needed to bring the total loss 

reserves for that master commitment to an Acquired Member Assets 

(AMA) investment grade, minus the total first loss account. 

Over time, the credit enhancement obligation is recalculated. If the 

newly calculated credit enhancement obligation is lower than the 

remaining obligation, the PFI’s credit enhancement obligation is reset 

to the new lower level. 

FHLB: Any losses that exceed the first loss account and the credit 

enhancement obligation under the MPF 35 product are absorbed by 

the FHLB. 

Credit enhancement fees: 9 basis points (12 basis points for a master 

commitment over $15 million) are paid monthly on the outstanding principal balance of the master commitment. Credit enhancement fees are 

reduced to reflect performance of the loans by deducting an amount 

equivalent to the realized losses of the master commitment, up to the 

maximum of the first loss account. 

Remittance Options: Actual/actual (remit only the actual amount of 

principal and interest collected from borrower), actual/actual single 

remittance, or scheduled/scheduled (remit the scheduled principal and 

interest due whether or not payments are collected from borrowers). 

Servicing Options: Servicing retained or servicing released options. (See 

Servicing Options in Overview for a full description.) 

Servicing Fee: 25 basis points paid monthly. 

RESOURCES 

Product parameters are subject to change. See individual FHLB 

summaries to contact your Federal Home Loan Bank. 

MPF 35 

https://www.fhlbmpf.com/PRODUCTS/Shared%20Documents/

FHLBanks%20National%2035%20Term%20Sheet2016.pdf

POTENTIAL BENEFITS 

MPF 35 provides PFIs with the 

ability to sell conventional loans 

and transfer liquidity, interest 

rate, and prepayment risk to 

the FHLBs. 

MPF 35 lets PFIs share the credit 

risk of the loans with their FHLB. 

The PFI receives a monthly credit 

enhancement fee income. 

The PFI can either retain or sell 

servicing rights. 

POTENTIAL CHALLENGES 

PFI retains the representa 

tions and warranties’ risk 

for origination. 

Credit enhancement fee income is 

reduced when loan losses occur. 

FDIC | Affordable Mortgage Lending Guide | 46 
 

OVERVIEW

Non-Credit Enhanced Products 

OVERVIEW 

Non-credit enhanced Mortgage Partnership Finance 

Program (MPF) products help PFIs deliver Fannie Mae 

eligible loans and other government loans22 — such as 

loans insured or guaranteed by the Federal Housing 

Administration (FHA), the U.S. Department of Veterans 

Affairs (VA), the U.S. Department of Agriculture’s Rural 

Development (RD), the U.S. Department of Housing 

and Urban Development (HUD) Section 184 program, 

and HUD jumbo loans — into the secondary market. 

Unlike credit enhanced products that require PFIs to 

retain a portion of the credit risk, non-credit enhanced 

products are more similar in nature to a traditional 

secondary market sale. They let PFIs sell conventional 

and government loan products to their FHLB, but standard representations and warranties23 still apply. This 

can be an attractive delivery option for those lenders 

interested in originating Fannie Mae or government 

loans, but without the internal infrastructure required to 

deliver the loans directly to those agencies. 

Depending upon the specific product, the FHLB either 

acts as an aggregator or issuer on non-credit enhanced 

loans and delivers them to Fannie Mae or other thirdparty investors such as Redwood Trust, or the FHLB 

holds the loans in its portfolio. Regardless of where 

the loans are held, the relevant government agency 

provides the credit insurance on the loans. 

There are no monthly credit enhancement fees paid, 

and servicing options vary by product type on noncredit enhanced products. This Guide covers the 

following MPF non-credit enhanced products: 

MPF Xtra: Secondary market fixed-rate, Fannie Mae 

mortgage products with no credit retention to PFIs. 

The FHLB of Chicago purchases Fannie Mae eligible 

mortgage loans from the PFI and sells the loans to 

Fannie Mae. The credit risk associated with the loans 

is assumed by Fannie Mae. MPF Xtra offers PFIs the 

benefits of a secondary market delivery with no 

credit risk retained. Servicing retained and servicing 

released options are available. 

MPF Direct: Secondary market jumbo mortgage 

product with no credit retention to the PFI. The FHLB 

of Chicago purchases jumbo loans from the PFI and 

sell the loans to Redwood Trust, a real estate trust 

and jumbo loan investor. The credit risk associated 

with the loans under the MPF Direct product is transferred to Redwood Trust. PFIs must be specifically 

approved to sell MPF Direct loans through their local 

FHLB by both the FHLB of Chicago and Redwood 

Trust. Servicing released only. 

MPF Government: Secondary market fixed-rate, 

government-insured mortgage products including 

FHA, VA, RD Section 502, and HUD 184 loans with no 

credit risk retention to the PFI. The FHLB purchases 

MPF Government loans and holds them in portfolio. 

The credit risk associated with the loans is covered 

by the government agency that insures or guarantees 

the loan. Servicing retained and servicing released 

options are available. 

MPF Government MBS: Secondary market fixed-rate, 

government-insured mortgage products including 

FHA, VA, USDA RD, and HUD closed loans with no 

credit risk retention to the PFI. The FHLB acts as an 

issuer, pooling these loans, and issuing Ginnie Maebacked securities that are backed by the pools and 

sold to private investors. The credit risk associated 

22 See Affordable Mortgage Lending Guide, Part I: Federal Agencies and 

Government Sponsored Enterprises (Washington, DC: Federal Deposit 

Insurance Corporation, 2016), https://fdic.gov/mortgagelending for a complete list of loan products. 

23 Representations and warranties are claims that the seller makes in a purchase 

and sales agreement about the nature of the loan and which in turn form the 

basis for due diligence. If lenders are found to violate representations and warranties, secondary market entities may force the lender to repurchase the loan 

or may refuse insurance or guarantee claims. 

47 | FDIC | Affordable Mortgage Lending Guide 
 

 

 

with the loans themselves is covered by the insuring 

government agency while Ginnie Mae guarantees 

payments to the investors, thus removing any credit 

risk to the investors. PFIs must be approved by the 

applicable government agency to originate and service loans. Servicing retained and servicing released 

options are available. 

NON-CREDIT ENHANCED 

LOAN TYPE LOAN TERMS INVESTOR SERVICING OPTIONS 

MPF Xtra Fixed rate Fannie 

Mae products 

conforming, loan to value up 

to 97% Fannie Mae Retain or release servicing rights 

MPF Direct Jumbo up to 90% loan to value, up to 

$2.5 million Redwood Trust Servicing released only 

MPF 

Government 

FHA, VA, USDA 

RD 502, HUD 184 

determined by government

program guidelines FHLB Retain or release servicing rights 

MPF 

Government MBS 

FHA, VA, USDA 

RD, HUD 

determined by government

program guidelines 

Ginnie Mae 

Investors 

Retain or release 

servicing rights 

FDIC | Affordable Mortgage Lending Guide | 48 
 

NON-CREDIT ENHANCED PRODUCTS

MPF Xtra

The MPF Xtra product lets PFIs originate and sell fixed-rate Fannie Mae mortgage products with 

no credit retention. 

BACKGROUND AND PURPOSE 

MPF Xtra offers PFIs the ability to originate and sell 

closed, fixed-rate, Fannie Mae24 eligible mortgage 

loans with no credit risk retention although standard 

representations and warranties25 still apply. Under MPF 

Xtra, the FHLB of Chicago operates as an aggregator for PFIs to sell loans to Fannie Mae. The credit risk 

associated with the loans under the MPF Xtra product 

is assumed by Fannie Mae. Through MPF Xtra, PFIs can 

take advantage of the benefits of secondary market 

liquidity without becoming a direct Fannie Mae seller/ 

servicer. 

Eight of the 11 FHLBs offer the MPF Xtra product to 

their PFIs, and the Federal Home Loan Bank of Chicago 

acts as the administrator of the program and as the official Fannie Mae seller/servicer. As the seller/servicer, 

the FHLB of Chicago assumes the representations and 

warranties (reps and warrants) to Fannie Mae on loans 

sold through MPF Xtra. However, PFIs are required to 

retain the customary reps and warrants to the FHLB for 

originations sold through MPF Xtra. PFIs are provided 

access to Fannie Mae’s Desktop Underwriter® risk 

assessment platform and can use either automated or 

manual underwriting processes. 

Loan Types: Most fixed-rate Fannie Mae products 

including HomeReady® and cash-out refinances of 

existing Fannie Mae mortgages are eligible. Loan-tovalues up to 97 percent are allowed. 

Loan Delivery: After obtaining a master commitment 

from the FHLB, the PFI will contact the MPF Xtra Service 

Center to obtain indicative pricing,26 enter into mandatory delivery commitments, and lock in the final price 

for the loans to be sold under an MPF Xtra master commitment. PFIs will submit loan information and funding 

requests using the eMPF website. The eMPF website 

is a secure, transactional resource that PFIs can use to 

obtain credit enhancement determinations, execute 

delivery commitments, and deliver loans 

(see Resources). 

There is a “best efforts” option for individual loan 

deliv­ery with no pair-off fees for non-delivery.27 Under 

a best efforts delivery commitment, PFIs can lock in 

specific pricing for loans they expect to deliver within a 

specific time frame. PFIs will not be charged for loans 

that do not close. 

Underwriting: Loans can be underwritten manually or 

though Fannie Mae’s Desktop Underwriter®. 

Servicing Options: Servicing retained or servicing 

released options. (See Servicing Options in Overview 

for a full description.) 

24 See Affordable Mortgage Lending Guide, Part I: Federal Agencies and 

Government Sponsored Enterprises (Washington, DC: Federal Deposit 

Insurance Corporation, 2016), https://fdic.gov/mortgagelending for a complete list of loan products. 

25 Representations and warranties are claims that the seller makes in a purchase and sales agreement about the nature of the loan and which in turn 

form the basis for due diligence. If lenders are found to violate representations and warranties, secondary market entities may force the lender to 

repurchase the loan or may refuse insurance or guarantee claims. 

26 This is the preliminary estimate for the price of loans to be sold under the 

MPF Xtra master agreement. It is not binding and may be subject to change. 

27 Typically, Fannie Mae pair off fees are paid when a lender is unable to meet 

the terms of a delivery commitment. In the case of the best efforts option 

used for the MPF Xtra product, PFIs estimate the loan volume they will deliver 

under a specified contract but are not charged if they are unable to deliver 

the full commitment. 

49 | FDIC | Affordable Mortgage Lending Guide 
 

-

-

Servicing Fee: 25 basis points paid monthly, if servicing is retained. 

Credit risk-sharing structure: Not applicable. 

Other fees: Loans are subject to Fannie Mae Loan Level Price Adjustments28 

(LLPAs) and Investor Price Adjustments (IPAs). Pricing adjustments are 

assessed on an individual loan level and based upon loan features such as 

credit score and loan-to-value ratios. 

RESOURCES 

Product parameters are subject to change. See individual FHLB 

summaries to contact your Federal Home Loan Bank. 

MPF Xtra 

https://www.fhlbmpf.com/Shared%20Documents/MPFXtra_Provider.pdf 

eMPF Website (ID/Password required) 

https://www.fhlb-mpf.com/eMPF/Logon.aspx?ReturnUrl=/empf 

eMPF PFI User Manual 

https://www.fhlbmpf.com/Shared%20Documents/eMPFUserManual.pdf 

POTENTIAL BENEFITS 

MPF Xtra offers PFIs the ability 

to originate Fannie Mae eligible 

loans and transfer liquidity, 

prepayment, interest, and credit 

risk while avoiding the financial 

and operational requirements 

associated with becoming a direct 

Fannie Mae seller/servicer. 

PFIs can obtain access to Desktop 

Underwriter® and Collateral 

Underwriter®, Fannie Mae’s online 

credit and appraisal underwriting 

systems, at no cost. 

The PFI can either retain or sell 

servicing rights. 

POTENTIAL CHALLENGES 

PFI retains the representa 

tions and warranties’ risk 

for origination. 

The PFIs must become familiar 

with Fannie Mae product under 

writing standards. 

28 For more information, see Fannie Mae Loan Level Price Adjustment Matrix at 

https://www.fanniemae.com/content/pricing/llpa-matrix.pdf 

FDIC | Affordable Mortgage Lending Guide | 50 
 

NON-CREDIT ENHANCED PRODUCTS

MPF Direct

The MPF Direct product helps PFIs originate and sell jumbo loans with no credit retention. 

BACKGROUND AND PURPOSE 

MPF Direct offers PFIs the ability to originate and sell 

jumbo loans up to $2.5 million, with no credit risk 

retention. Under MPF Direct, the FHLB of Chicago 

purchases jumbo loans from the PFI and sell the loans 

to Redwood Trust, a real estate trust and jumbo loan 

investor. PFIs must be specifically approved to sell MPF 

Direct loans through their local FHLB. In addition, the 

PFI must be approved by Redwood Trust for this product. Although the credit risk associated with the loans 

under MPF Direct is transferred to Redwood Trust, PFIs 

are required to retain the representations and warranties for origination required by the FHLB on loans sold 

through MPF Direct. There is no credit enhancement 

obligation for the PFI and credit enhancement fees are 

not paid. 

Loan Types: Jumbo loans up to $2.5 million. Loan-tovalues up to 90 percent. 

Loan Delivery: Loans are committed prior to closing. The PFI obtains a master commitment from the 

FHLB. The PFI submits loan data, locks in the rate, loan 

documents, and notifies the PFI of all MPF loans in 

the system pending funding through the eMPF Direct 

Portal website. Indicative pricing is sent to the PFI daily. 

Underwriting: Loans must be manually underwritten. 

Servicing Options: Servicing released only. 

Servicing Fee: Not applicable. 

Credit risk-sharing structure: Not applicable. 

Other fees: None. 

Potential Benefits 

• MPF Direct offers PFIs the ability to originate jumbo

loan products and transfer liquidity, prepayment,

and credit risk to investors.

• The PFI must sell servicing rights.

Potential Challenges 

• PFI retains the representations and warranties’ risk

for origination required by the FHLB.

• The PFI must be specifically approved to deliver

the MPF Direct product.

RESOURCES 

Product parameters are subject to change. See 

individual FHLB summaries to contact your Federal 

Home Loan Bank. 

MPF Contact Information 

https://www.fhlbmpf.com/Pages/ContactUs.aspx 

MPF Direct 

https://www.fhlbmpf.com/Shared%20Documents/ 

FHLBNational%20MPF%20Direct%20Term%20 

SheetD2%20070915%20FINAL.pdf 

eMPF Direct Portal Website (ID/Password required) 

https://www.fhlb-mpf.com/eMPF/Logon.

aspx?ReturnUrl=/empf

eMPF PFI User Manual 

https://www.fhlbmpf.com/Shared%20Documents/ 

eMPFUserManual.pdf 

51 | FDIC | Affordable Mortgage Lending Guide 
 

 

NON-CREDIT ENHANCED PRODUCTS 

MPF Government 

The MPF Government product helps PFIs originate and sell fixed-rate mortgage products insured or guaranteed by 

the government including the Federal Housing Administration (FHA), the U.S. Department of Veterans Affairs (VA), 

the U.S. Department of Agriculture’s Rural Development (RD) Section 502, and the U.S. Department of Housing and 

Urban Development (HUD) 184 loans, with no credit retention. 

BACKGROUND AND PURPOSE 

MPF Government offers PFIs the ability to originate 

and sell loans insured or guaranteed by the FHA, VA, 

USDA’s RD Section 502, and HUD 184 loans with no 

credit risk retention.29 MPF Government loans are originated and committed to an FHLB master commitment 

prior to closing. The FHLB purchases MPF Government 

loans and holds them in portfolio. Although the credit 

risk associated with the loans is covered by the 

insuring government agency, PFIs are required to 

retain the customary representations and warranties 

for origination required by the FHLB on loans sold 

through MPF Government. PFIs must be approved by 

the applicable government agency to originate and 

service loans. 

Loan Types: FHA, VA, RD Section 502, and HUD 

Section 184. 

Loan Delivery: The PFI will obtain a master commitment from the FHLB for government loans the PFI 

expects to sell, specifying the time period in which it 

expects to sell the mortgages to the FHLB. 

Underwriting: The underwriting requirements of the 

insuring or guaranteeing government agency apply. 

Servicing Options: Servicing retained or servicing 

released options. (See Servicing Options in Overview 

for a full description.) 

Servicing Fee: 44 basis points paid monthly, if servicing 

is retained. 

Credit risk-sharing structure: Not applicable. 

Potential Benefits 

• The MPF Government offers PFIs the ability to

originate and sell government loan products and

transfer liquidity, prepayment, and credit risk to

the investors.

• The PFI can either retain or sell servicing rights.

Potential Challenges 

• The PFI retains the representations and warranties’

risk for origination required by the FHLB.

• The applicable government agency must

approve the PFI to originate and service loans (if

applicable).

29 See Affordable Mortgage Lending Guide, Part I: Federal Agencies and 

Government Sponsored Enterprises (Washington, DC: Federal Deposit 

Insurance Corporation, 2016), https://fdic.gov/mortgagelending for a complete list of loan products. 

FDIC | Affordable Mortgage Lending Guide | 52 
 

 

NON-CREDIT ENHANCED PRODUCTS 

MPF Government MBS 

The MPF Government MBS (mortgage-backed securities) product provides PFIs with the opportunity to sell closed 

loans insured or guaranteed under the Federal Housing Administration (FHA), the U.S. Department of Veterans 

Affairs (VA), the U.S. Department of Agriculture’s Rural Development (RD), and the U.S. Department of Housing and 

Urban Development (HUD) loan programs with no credit retention. The FHLB acts as an issuer, pooling these loans 

and using the pools as collateral for Ginnie Mae mortgage-backed securities. 

BACKGROUND AND PURPOSE 

Under the MPF Government MBS (mortgage-backed 

securities) product, the FHLB of Chicago purchases 

closed loans insured or guaranteed by the FHA, VA, 

USDA’s RD, and HUD loans. The FHLB of Chicago acts 

as an issuer, pooling loans and using them as collateral 

for Ginnie Mae mortgage-backed securities. Although 

the credits risk associated with the loans is covered by 

the insuring government agency, PFIs are required to 

retain the customary representations and warranties for 

origination required by the FHLB on loans sold through 

MPF Government MBS. PFIs must be approved by the 

applicable government agency to originate and service 

loans. 

Loan Types: FHA, VA, USDA RD, and HUD. 

Loan Delivery: Closed loans only. The PFI obtains a 

Government MBS master commitment from the FHLB 

for the dollar amount of Government MBS mortgages 

the PFI expects to sell, specifying the time period in 

which it expects to sell them to the FHLB. 

Underwriting: The underwriting requirements of the 

insuring or guaranteeing government agency apply. 

Servicing Options: Servicing retained or released 

options. (See Servicing Options in Overview for a full 

description.) 

Servicing Fee: The PFI deducts the servicing fee from 

the monthly interest received from the mortgagor and 

remits the remaining amount monthly to the FHLB. The 

monthly servicing fee is based on the note rate. 

Credit risk-sharing structure: Not applicable. 

Potential Benefits 

• The MPF Government MBS offers PFIs the ability to

sell closed government loan products and transfer

liquidity and prepayment risks.

• The PFI can either retain or sell servicing rights.

Potential Challenges 

• PFIs must be approved by the applicable government agency to originate and service loans.

• The PFI retains the representations and warranties’

risk for origination required by the FHLB.

53 | FDIC | Affordable Mortgage Lending Guide 
 

Visit FDIC’s Affordable Mortgage Lending Center at 

https://fdic.gov/mortgagelending 

FDIC | Affordable Mortgage Lending Guide | 54 
 

OVERVIEW 

Mortgage Purchase Program 

OVERVIEW 

The FHLB of Cincinnati and the FHLB of Indianapolis 

each offer a Mortgage Purchase Program (MPP). The 

program provides an alternative to the traditional secondary mortgage market. 

By selling mortgage loans to MPP, members can 

increase their balance sheet liquidity and minimize the 

risks associated with holding fixed-rate mortgages in 

portfolio. The FHLB holds the liquidity, interest rate, 

and prepayment risks of the loans it purchases from a 

member. All mortgage loans purchased from members 

through the MPP are maintained on the FHLB’s balance sheet. 

The FHLB mitigates its program credit risk exposure 

through underwriting and pool composition requirements and through the establishment of the Lender 

Risk Account (LRA) credit enhancement, which is a 

reserve account for potential loan losses. Along with 

a competitive cash price, the purchase transaction on 

conventional loans include a set aside of funds into 

the LRA. LRA funds act as a first loss account against 

possible loan losses. LRA balances not used to offset 

losses are returned to the member in accordance with 

a predetermined schedule. When loans perform as 

expected, member banks receive additional future 

cash flow. 

The FDIC talked with community bankers about their participation in 

various Federal Home Loan Bank programs. The following is an excerpt 

from one of these discussions. 

A banker from the Midwest discussed participating in the Federal 

Home Loan Bank of Indianapolis’ Mortgage Purchase Program (MPP). 

According to the bank’s representative, the bank’s MPP volume began 

to increase significantly in 2008. As interest rates dropped, the bank, 

which has seven branches, saw an opportunity with the MPP program 

to reduce its long-term interest rate risk on some of its portfolio loans 

and simultaneously help its customers refinance into lower rates. Since 

that time, the MPP program has helped the bank reach a wider customer base, including more low- and moderate-income borrowers with 

both purchase and refinance transactions, averaging 150 loans per year. 

In addition to reducing the interest rate risk and providing the bank 

with the ability to sell more loans into the secondary market, the MPP 

also provides substantial fee income for the bank, including up-front 

fees of one to two percentage points of the total loan amount delivered, as well as 25 basis points in monthly servicing fees. A portion 

of the up-front fees is paid into a Lender Risk Account (LRA), which 

is a reserve account for potential loan losses held by the FHLB of 

Indianapolis. Over time, if the loans perform as expected, funds from 

the LRA are distributed back to the bank, thereby rewarding the delivery 

of high-quality loans with an additional future income stream. 

A COMMUNITY BANKER CONVERSATION 

Using the FHLB of Indianapolis’ 

Mortgage Purchase Program 

55 | FDIC | Affordable Mortgage Lending Guide 
 

-

Products 

Conventional: Secondary market, fixed-rate, fully amortizing loans of 

conforming balances. 

Servicing Options 

Members have the option of retaining the servicing or selling the 

servicing rights to the MPP approved Servicing Released Servicer.

Remittance Options 

When retaining the servicing, members may choose to remit 

principal and interest payments on an Actual/Actual or Scheduled/ 

Scheduled basis. 

Loan Commitments 

Members sell loans to the FHLB through Mandatory Delivery 

Commitments. Pair off fees may apply if commitments cannot 

be delivered.

FHA: Secondary market, fixed rate, fully amortizing loans of conforming 

balances that are fully insured by Federal Housing Administration. 

MPP Participation Eligibility 

Approved members of the FHLB of Cincinnati and the FHLB of 

Indianapolis are eligible to participate in their FHLB’s Mortgage 

Purchase Program. 

Applicants are required to be in a sound financial condition and have 

the ability to originate and service (if servicing retained) to secondary 

market standards. Approved members are required to maintain a quality 

control program that conforms to secondary market standards. 

Training 

Upon approval of participation into the program, FHLBs provide training for use on the Loan Acquisition System, the MPP intranet-based 

selling platform. MPP conferences and additional training opportunities 

are offered. 

RESOURCES 

FHLB Indianapolis 

Website: https://www.fhlbi.com 

Email: memberservices@fhlbi.com

Phone: 800-442-2568 

FHLB Cincinnati 

Website: https://www.fhlbcin.com 

Email: info@fhlbcin.com Phone:

866-677-3452

POTENTIAL BENEFITS 

Participation in the Mortgage 

Purchase Program provides 

members with the ability to sell 

conventional and/or government 

mortgage loans and transfer 

liquidity risk, interest-rate risk, 

and prepayment risk to the FHLBs. 

The program allows members 

to share the credit risk with its 

Federal Home Loan Bank. 

The member can either retain or 

sell servicing rights. 

POTENTIAL CHALLENGES 

The member retains the repre 

sentations and warranties’ risk 

for origination. 

FDIC | Affordable Mortgage Lending Guide | 56 
 

 

FEDERAL HOME LOAN BANKS 

Programs beyond the Scope of this Guide 

As private entities with a mission of providing 

liquidity for their members’ lending and community 

development activities, many FHLBs have expanded 

into products unrelated to residential mortgages. They 

are described briefly below but are not covered in 

depth in this Guide. 

The FHLBs offer discounted advances for economic 

development purposes through the Economic 

Development Program, the Community Investment 

Cash Advance Program, and the Community 

Investment Program. The Economic Development 

Program focuses on small business lending and the 

Community Investment Cash Advance Program focuses 

on community development activities such as social 

services, infrastructure, and public facilities projects. 

Mixed-use projects with a housing component are an 

allowed use of this program, but few if any of these 

projects are likely to be owner occupied and the 

member’s financing role is exclusively at the project 

financing level. 

FHLBs also may choose to offer rehabilitation 

assistance grants to address physical property and 

accessibility needs for existing homeowners. In the 

event of a natural disaster, FHLBs typically offer a timelimited package of discounted advances, rehabilitation 

assistance, and other tools to ensure that members in 

the affected areas can serve their customers’ needs in a 

time of crisis. 

FHLBs also offer “letters of credit” to their members. A 

letter of credit is a credit instrument that obligates, in 

this case, the FHLB to make payment to a third party 

if the member is unable to fulfill its credit obligation. 

In other words, FHLB letters of credit provide backing 

for the member to obtain favorable financing terms 

outside of the FHLB. Letters of credit can be used to 

help members obtain financing for a variety of uses 

including government bonds and other government 

financing. 

Finally, FHLBs offer correspondent services. These are 

different from correspondent services with respect 

to Fannie Mae and Freddie Mac, where an entity with 

direct access to the secondary mortgage market acts 

as an intermediary for entities without that capacity. 

The Mortgage Purchase Program and the Mortgage 

Partnership Finance Program offer an equivalent at the 

FHLBs. In the FHLB context, correspondent services 

refers to tools that assist in the maintenance of the 

relationship between the FHLB and the member, 

including secure internet banking systems, fund 

transfers, investment accounts, and settlement services. 

For additional information about these products and 

programs, see the individual FHLB summary for contact 

information. 

57 | FDIC | Affordable Mortgage Lending Guide 
 

Visit FDIC’s Affordable Mortgage Lending Center at 

https://fdic.gov/mortgagelending 

FDIC | Affordable Mortgage Lending Guide | 58 
 

 

FDIC’s Community Affairs Program

The FDIC’s Community Affairs Program supports the 

FDIC’s mission to promote stability and public confidence in the nation’s financial system by encouraging 

economic inclusion and community development 

initiatives that broaden access to safe and affordable 

credit and deposit services from insured depository 

institutions, particularly for low- and moderateincome (LMI) consumers and small businesses. 

To accomplish this work, the FDIC: 

• provides information and technical assistance

to banks to assist them in responding to the

credit and banking needs of the communities

they serve, including low- and moderateincome people;

• convenes banks, state and local governments,

and community-based organizations to explore

resources and promising practices on a variety

of topics;

• develops and disseminates financial education

tools for all ages to banks, teachers, parents,

emerging small businesses, and nonprofit training organizations; and

• supports pilot programs and alliances to expand

financial capability and economic inclusion.

For low- and moderate-income consumers and small 

business owners, access to the mainstream banking 

system provides an important pathway to economic 

opportunity. Over time, the establishment of a successful relationship with a depository institution can 

help manage day-to-day needs and build wealth to 

achieve future goals. 

Broad participation in the mainstream financial system 

is an essential element in promoting stability and confidence in that system. Banks build trust and confidence 

through their ongoing work to serve their communities and by offering fair, safe, and affordable services, 

including for low- and moderate-income people. The 

FDIC’s Community Affairs staff is available to assist 

financial institutions in developing strategies that are 

responsive to the credit, service, and investment needs 

of their communities. 

ECONOMIC INCLUSION 

The FDIC Community Affairs Program places a 

priority on addressing five areas of opportunity for 

economic inclusion. These are: 

1. support quality programs and resources for

financial education and capability;

2. promote access to and use of safe, affordable,

insured deposit accounts;

3. improve household financial resilience by

encouraging safe and affordable savings and

credit solutions;

4. encourage insured depository institutions to

make available prudently underwritten, affordable, and responsible mortgage credit for LMI

households; and

5. encourage insured depository institutions and

their partners to prudently serve the financial

needs of emerging entrepreneurs and small

businesses.

59 | FDIC | Affordable Mortgage Lending Guide 
 

FDIC REGIONAL AND AREA OFFICES 

Atlanta Regional Office 

10 Tenth Street, N.W. Suite 800 

Atlanta, GA 30309-3906 

Phone: (678)916-2200 (main switchboard) 

Phone: (800) 765-3342 (toll-free) 

Email: ATLCommunityAffairs@fdic.gov 

States Served: Alabama, Florida, Georgia, North 

Carolina, South Carolina, Virginia, West Virginia 

Chicago Regional Office 

300 South Riverside Plaza, Suite 1700 

Chicago, IL 60606-3447 

Phone: (312) 382-6000 (main switchboard) 

Phone: (800) 944-5343 (toll-free) 

Email: CHICommunityAffairs@fdic.gov 

States Served: Illinois, Indiana, Kentucky, Michigan, 

Ohio, Wisconsin 

Dallas Regional Office 

1601 Bryan Street, 35th Floor 

Dallas, TX 75201-4586 

Phone: (214) 754-0098 (main switchboard) 

Phone: (800) 568-9161 (toll-free) 

Email: DALCommunityAffairs@fdic.gov

States Served: Colorado, New Mexico, Oklahoma, 

Texas, Arkansas, Louisiana, Mississippi, Tennessee 

Dallas Region – Memphis Area Office 

6060 Primacy Parkway, Suite 300 

Memphis, TN 38119-5770 

Phone: (214) 754-0098 (main switchboard) 

Phone: (800) 210-6354 (toll-free) 

Email: MEMCommunityAffairs@fdic.gov 

States Served: Arkansas, Louisiana, 

Mississippi, Tennessee 

Kansas City Regional Office 

1100 Walnut St, Suite 2100 

Kansas City, MO 64106 

Phone: (816) 234-8000 (main switchboard) 

Phone: (800) 209-7459 (toll-free) 

Email: KSCommunityAffairs@fdic.gov 

States Served: Iowa, Kansas, Minnesota, Missouri, 

Nebraska, North Dakota, South Dakota 

New York Regional Office 

350 Fifth Avenue, Suite 1200 

New York, NY 10118-0110 

Phone: (917) 320-2500 (main switchboard) 

Phone: (800) 334-9593 (toll-free) 

Email: NYCommunityAffairs@fdic.gov 

States and Territories Served: Delaware, District 

of Columbia, Maryland, New Jersey, New York, 

Pennsylvania, Puerto Rico, Virgin Islands, Connecticut, 

Maine, Massachusetts, New Hampshire, Rhode 

Island, Vermont 

New York Region – Boston Area Office 

15 Braintree Hill Office Park 

Braintree, MA 02184-8701 

Phone: (781) 794-5500 (main switchboard) 

Phone: (866) 728-9953 (toll-free) 

Email: BOSCommunityAffairs@fdic.gov

States Served: Connecticut, Maine, Massachusetts, New 

Hampshire, Rhode Island, Vermont 

San Francisco Regional Office 

25 Jessie Street at Ecker Square, Suite 1800

San Francisco, CA 94105-2780

Phone: (415) 546-0160 (main switchboard)

Phone: (800) 756-3558 (toll-free)

Email: SFCommunityAffairs@fdic.gov

States and Territories Served: Alaska, Arizona,

California, Guam, Hawaii, Idaho, Montana, Nevada,

Oregon, Utah, Washington, Wyoming

FDIC | Affordable Mortgage Lending Guide | 60 
 

Glossary & Terms

ACRONYMS 

AHP: Affordable Housing Program 

AMA: Acquired Member Asset (FHLBs) 

AMI: Area median income 

ARM: Adjustable-rate mortgage 

CIP: Community Investment Program 

CRA: Community Reinvestment Act 

DTI: Debt-to-income ratio 

DU: Desktop Underwriter® (Fannie Mae) 

FDIC: Federal Deposit Insurance Corporation 

FHA: Federal Housing Administration 

FHFA: Federal Housing Finance Agency 

FHLBs: Federal Home Loan Banks 

GSEs: Government-sponsored enterprises (refers to 

Fannie Mae and Freddie Mac) 

HUD: U.S. Department of Housing and 

Urban Development 

IDA: Individual development account 

LMI: Low- and moderate-income 

LLPA: Loan-level price adjustment 

LTV: Loan to value 

MBS: Mortgage-backed security 

MPF: Mortgage Partnership Finance® Program 

MPP: Mortgage Purchase Program 

PFIs: Participating Financial Institutions (FHLBs) 

PMI: Private mortgage insurance 

USDA: U.S. Department of Agriculture 

VA: U.S. Department of Veterans Affairs 

TERMS 

Adjustable-rate mortgage (ARM): A mortgage loan 

with an interest rate on the note that is periodically 

adjusted based on an index that reflects the cost to the 

lender of borrowing on the credit markets. Most ARMs 

allowed in programs covered in this Guide are hybrid 

ARMs that have an initial fixed-rate period. ARMs may 

have restrictions, or cap rates, on the amount of the 

first, periodic, and lifetime total changes in the interest 

rate. 

Aggregator: An entity that purchases mortgages from 

financial institutions and typically securitizes them into 

mortgage-backed securities that are then sold to the 

secondary mortgage market. 

AMA investment grade: This is a determination by 

the FHLB with respect to an asset or pool, based on 

documented analysis, including consideration of 

applicable insurance, credit enhancements, and other 

sources for repayment on the asset or pool, that the 

FHLB has a high degree of confidence that it will be 

paid principal and interest in all material respects, even 

under reasonable likely adverse changes to expected 

economic conditions. 

AMA program: An FHLB-established program to 

buy mortgage loans, which may comprise multiple 

AMA products. 

Approved lender: Lenders that apply for and meet 

requirements established by the entity (i.e., the Federal 

Housing Administration, U.S. Department of Housing 

and Urban Development, the U.S. Department of 

Veterans Affairs, the U.S. Department of Agriculture, 

and the government-sponsored enterprises) are 

granted permission to participate in the entity’s 

programs. Approved activities may include origination, 

underwriting, purchasing, holding, servicing, or selling 

mortgages. Common eligibility requirements include a 

61 | FDIC | Affordable Mortgage Lending Guide 
 

net worth threshold, a checklist of financial statements, 

and a quality control program. 

Approved seller/servicer: An institution approved 

to sell mortgages to, and to service mortgages purchased by the entity (i.e., Fannie Mae or Freddie Mac). 

Common eligibility requirements include a net worth 

threshold, a checklist of financial statements, and a 

quality control program. 

Area loan limits: Entities establish the maximum loan 

that can be insured, purchased, or guaranteed by the 

entity or program. Limits are based on median home 

values at the county level and entities typically update 

limits annually. For example, the Federal Housing 

Finance Agency (FHFA) sets “conforming loan limits” 

for the government-sponsored enterprises, the Federal 

Housing Administration sets “statutory loan limits” for 

approved lenders, the U.S. Department of Agriculture 

has “area loan limits,” and the U.S. Department of 

Veterans Affairs follows FHFA guidelines. 

Basis points: A basis point is one hundredth of 1 

percent. That is, one basis point equals 0.01 percent or 

there are 100 basis points in 1 percent. It is a common 

unit of measure for interest rates. 

Closing costs: Fees incurred by the borrower and/ or 

seller for costs associated with the closing transaction. 

Common fees include appraisal fees, tax service 

provider fees, title insurance, government taxes, 

and prepaid expenses such as property taxes and 

homeowner’s insurance. Fees are generally paid up 

front at closing or the lender may roll them into the 

mortgage, resulting in higher monthly payments. 

Conventional loan: A mortgage that is not insured or 

guaranteed by a Federal government agency, i.e., the 

Federal Housing Administration, U.S. Department of 

Housing and Urban Development, the U.S. Department 

of Veterans Affairs, the U.S. Department of Agriculture, 

and the Bureau of Indian Affairs. Conventional loans 

include both loans that conform to governmentsponsored enterprise (GSE) guidelines and those that 

do not conform. Conventional mortgages delivered to 

the GSEs are also known as conforming mortgages. 

Correspondent lender: A lending institution that 

originates and funds loans in its own name and 

then sells them to another lender or investor. The 

underwriting function in a correspondence relationship 

can be carried out by the correspondent or the 

investor. As a correspondent lender, the originating 

lender is acting as an extension of the investor. For 

example, correspondent lenders work with approved 

seller/servicers to originate government-sponsored 

enterprise loan products. 

Credit enhancement obligation: Mortgage Partnership 

Finance® Program credit-enhanced products divide 

mortgage losses on a given master contract between 

the FHLB and the member. The credit enhancement 

obligation defines the amount of risk assumed by the 

member for the realized losses of a specific master 

commitment. Member credit enhancement obligation 

funds are applied to losses only after the FHLBs’ first 

loss account has been depleted. 

Down payment: A payment made in cash at the onset 

of the purchase of an expensive asset. Homebuyers 

typically pay down payments that equal 5-25 percent 

of the total value of a home although some federal and 

GSE programs allow lower down payments. 

FICO score: A type of credit score that lenders use to 

assess a borrower’s credit risk. FICO stands for Fair 

Isaac Corporation, the company that created the FICO 

score. Scores are calculated using borrower credit 

reports and range from 300 to 850. A lower score 

indicates the borrower has poorer credit, and a higher 

score indicates the borrower has stronger credit. 

First loss account: Mortgage Partnership Finance 

Program credit-enhanced products divide losses 

between the FHLB and the member. The first loss 

account is the amount of risk absorbed by the 

FHLB from the realized losses of a specific master 

commitment. FHLB first loss account losses are taken 

prior to any credit enhancement obligation due from 

the member. 

First mortgage: A mortgage in the first-lien position 

that has priority over all other liens or claims in the 

event of default. 

Fixed-rate mortgage: The interest rate is defined when 

the borrower takes out the mortgage and does not 

change over the loan term. 

Ginnie Mae: Short for the Government National 

Mortgage Association. Ginnie Mae guarantees timely 

payments on mortgage-backed securities (MBS) 

backed by federally-insured loans including those 

FDIC | Affordable Mortgage Lending Guide | 62 
 

insured by the U.S. Department of Veterans Affairs, 

Federal Housing Administration, U.S. Department 

of Agriculture Rural Development, and the U.S. 

Department of Housing and Urban Development 

Office of Public and Indian Housing. Ginnie Mae 

securities are the only MBS guaranteed by the 

Federal government. 

Haircut: The percentage by which the market value of 

an asset(s) is reduced for the purpose of calculating 

collateral requirements. 

Loan limit: The maximum allowable mortgage amount 

under a particular program established by the federal 

agency or government-sponsored enterprise (GSE), 

generally according to statutory parameters. For 

example, the Federal Housing Finance Agency (FHFA) 

sets “conforming loan limits” for the GSEs, the Federal 

Housing Administration sets “statutory loan limits” for 

approved lenders, the U.S. Department of Agriculture 

has “area loan limits,” and the U.S. Department of 

Veterans Affairs (VA) follows FHFA guidelines. 

Loan-to-value (LTV) ratio: A ratio that compares the 

amount of the first mortgage with the appraised value 

of the property. It is calculated by dividing the loan 

amount by the value of the property. The higher the 

down payment, the lower the LTV. 

Low- and moderate-income (LMI) communities: Lowincome geographies have a median family income less 

than 50 percent of the area median income. Moderateincome geographies are those whose median family 

income is at least 50 percent but less than 80 percent 

of the area median income. Banks regulated under the 

Community Reinvestment Act are evaluated on how 

well they meet the credit needs of low- and moderateincome communities. 

Master Commitment: A contractual agreement 

between the purchaser and seller of mortgages that 

provides the terms of the sale, including mortgage 

eligibility requirements and the time period for which 

the agreement holds. 

Mortgage insurance: An insurance policy paid for by 

the borrower with the lender as beneficiary, in which 

a third party—the insurer—takes some of the loandefault risk. In the event of foreclosure, the insurer 

pays a set amount to the lender to cover some or all 

of the outstanding loan balance. Mortgage insurance 

should be distinguished from hazard insurance, which 

a homeowner purchases to cover losses from, for 

example, fire or theft. 

Participating financial institution (PFI): A member or 

housing associate of an FHLB that is authorized to sell, 

credit enhance, or service mortgage loans to or for 

its own FHLB through an AMA program, or a member 

or housing associate of another FHLB that has been 

authorized to sell, credit enhance, or service mortgage 

loans to or for another FHLB pursuant to an agreement 

between the FHLB acquiring the AMA product and the 

FHLB of which the selling institution is a member or 

housing associate. 

Pool: Defined by the FHLBs as a group of loans 

acquired under one or more loan funding 

commitments, contractual agreements, or 

similar arrangements. 

Private mortgage insurance (PMI): An insurance 

policy that protects lenders against loss if a borrower 

defaults on a conventional loan. PMI is required for 

government-sponsored enterprise loans with loan-tovalue ratios over 80 percent. Purchasing PMI allows the 

borrower to make a smaller down payment. 

Representations and warranties : Assertions that the 

seller makes in a purchase and sales agreement about 

the nature of the loan and which in turn form the 

basis for due diligence. If lenders are found to violate 

representations and warranties, secondary market 

entities may force the lender to repurchase the loan or 

may refuse insurance or guarantee claims. This is a tool 

for ensuring loan originators comply with the credit 

terms required by the secondary market entities. 

Secondary mortgage market: Market in which 

previously issued mortgages and mortgage-backed 

securities are traded among lenders and investors. 

Underserved areas: Federal agencies designate 

defined geographic regions (often specific census 

tracts) as “underserved” based on median income and 

minority population levels for purposes of directing 

federal funds to improve the community or for other 

purposes, including the assessment of how well 

Community Reinvestment Act (CRA) regulated lenders 

are meeting their CRA obligations. 

63 | FDIC | Affordable Mortgage Lending Guide 
Appendix A: FHLB Summaries 

FDlt 

FDIC Affcrdable Mortgage Lerdrng Gude 64 
FDIC | Affordable Mortgage Lending Guide

FEDERAL HOME LOAN BANKS

FHLB of Atlanta Overview

http://www.fhlbatl.com

Year Total Homeownership SetAside Volume Distributed

Number of

Homeownership 

Set-Aside Transactions

Total AHP Competitive 

Program Volume 

Distributed

Total AHP Competitive 

Program Transactions

2016 $16.4 million 2,377 $22 million 55

2015 $17.6 million 2,484 $19.7 million 53

2014 $18.2 million 2,384 $24.5 million 60

2013 $17.8 million 2,152 $21.1 million 52

2012 $22 million 3,041 $13.6 million 43

2011 $14.3 million 1,982 $37.5 million 56

Affordable Lending Services

• Business Development Services (facilitate • Collaborative Events with FDIC, OCC, and Federal 

member meetings with realtors, builders, etc.) Reserve Banks

• Financial Literacy Services • Structured Partnerships

• CRA Business Development Forums Affordable Lending Products 

• CRA Consultations • Community Investment Advances

• Member Webinars and Training • Competitive Affordable Housing Program

• Marketing Materials • Homeownership Set-Aside Specialized Programs 

• Programmatic Technical Assistance • Mortgage Partnership Finance® Program

HISTORICAL VOLUME 

Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and States Served: the District of Columbia 

Contact Information: http://corp.fhlbatl.com/get-in-touch

Training Events and http://corp.fhlbatl.com/who-we-are/events/

Webinars: http://corp.fhlbatl.com/who-we-are/webinars/
FDIC | Affordable Mortgage Lending Guide

 

FHLB OF ATLANTA MPF PROGRAM PRODUCTS 

Credit Enhanced Non-credit Enhanced 

MPF MPF MPF Original MPF 125 MPF 35 MPF Xtra MPF Direct Government Government MBS 

FHLB OF ATLANTA HOMEOWNERSHIP SET-ASIDE SPECIALIZED PROGRAMS 

FHLB of Atlanta’s affordable housing products are available across the U.S. and its territories except the Community 

Rebuild and Restore and Structured Partnership Products, which are only available in the FHLB of Atlanta’s district 

or designated areas of its district. Note that for all programs the retention period is five years. 

Homeownership Set-Aside Program Operations 

Process for reserving and applying for funding: Automated 

Time from application to funding: Purchase; seven business days. Rehabilitation; three business days for 

application review, up to 60 days for rehabilitation work completion 

Security documents needed: Recorded lien 

Fund distribution: First come, first served 

First-time Homebuyer Community Partners 

This product provides up to $5,000 in matching funds This product provides up to $7,500 in matching funds 

for the down payment and closing costs of first-time for down payment and closing costs for current or 

homebuyers, expanded to include recovering victims retired law enforcement officers, educators, health care 

of catastrophic loss or natural disasters. workers, firefighters, and other first responders. 

Target populations First-time homebuyers Target populations 

Per-member limit $1 million Per-member limit

Maximum award 

per unit $5,000 Maximum award per unit

Maximum % AMI 80% Maximum % AMI 

Funding Period Until December 15 or until funds 

are depleted Funding Period 

Time frame, purchase 45 days Time frame, purchase 

Time frame,

rehabilitation N/A Time frame,rehabilitation 

Time frame, Individual

Development Account

(IDA) 

N/A 

Time frame, Individual

Development Account

(IDA) 

% for first-time 

homebuyers 100% % for first-time 

homebuyers 

Homeownership

Counseling Required Yes Homeownership

Counseling Required 

Subsidy match $4 in subsidy for every $1 from 

homeowner, minimum $1,000 Subsidy match 

Law enforcement, educators,

health care workers, firefighters, and 

other first responders 

$1 million 

$7,500 

80% 

Until December 15 or until funds 

are depleted 

45 days 

N/A 

N/A 

N/A 

Yes 

$4 in subsidy for every $1 from 

homeowner, minimum $1,000 
FDIC | Affordable Mortgage Lending Guide

 

Foreclosure Recovery 

This product provides up to $15,000 in matching funds 

for the down payment, closing costs, and rehabilitation 

costs for the purchase and rehabilitation of an existing 

home from the Real Estate Owned (REO) inventory of 

an FHLB of Atlanta member. 

Target populations 

Per-member limit

Maximum award 

per unit

Maximum % AMI 

Funding Period 

Time frame, purchase 

Time frame,

rehabilitation 

Time frame, Individual

Development Account

(IDA) 

% for first-time 

homebuyers 

Homeownership

Counseling Required 

Subsidy match 

Purchase or rehabilitation of 

an FHLB of Atlanta member’s 

REO portfolio 

$1 million 

$15,000 

80% 

Until December 15 or until funds 

are depleted 

45 days 

N/A 

N/A 

N/A 

Yes 

$4 in subsidy for every $1 from 

homeowner, minimum $1,000 

Veterans and Returning Veterans Purchase 

This product provides up to $10,000 in funding for a 

home purchase or purchase/rehabilitation to members 

of any branch of the U.S. military, their spouses, or their 

surviving spouses. 

Target populations 

Per-member limit

Maximum award 

per unit

Maximum % AMI 

Funding Period 

Time frame, purchase 

Time frame,

rehabilitation 

Time frame, Individual

Development Account

(IDA) 

% for first-time 

homebuyers 

Homeownership

Counseling Required 

Subsidy match 

Veterans or active duty military,

and spouses 

$1 million 

$10,000 

80% 

Until December 15 or until funds 

are depleted 

45 days 

N/A 

N/A 

N/A 

Yes 

None 
FDIC | Affordable Mortgage Lending Guide

 

 

Veterans and Returning Veterans Rehabilitation Community Rebuild and Restore 

This product provides up to $15,000 in funding for This product provides up to $10,000 in funding for the 

energy efficient and accessibility improvements to a rehabilitation of an existing owner-occupied property 

home owned by veterans or active duty members of located in “Major Disaster Declaration” areas within the 

any branch of the U.S. military, their spouses, or their FHLB of Atlanta’s district as designated by FEMA. 

surviving spouses. 

Veterans or active duty military, Target populations Target populations and spouses 

Per-member limit $1 million Per-member limit

Maximum award Maximum award $15,000 per unit per unit

Maximum % AMI 80% Maximum % AMI 

Until December 15 or until funds Funding Period Funding Period are depleted 

Time frame, purchase N/A Time frame, purchase 

Time frame, Time frame, 60 days rehabilitation rehabilitation 

Time frame, Individual Time frame, Individual

Development Account N/A Development Account

(IDA) (IDA) 

% for first-time % for first-time N/A homebuyers homebuyers 

Homeownership Homeownership Yes Counseling Required Counseling Required 

Subsidy match None Subsidy match 

Structured Partnership Product (SPP) 

Homeowner(s) located in “Major 

Disaster Declaration” areas as 

designated by FEMA 

$1 million 

$10,000 

80% 

Until December 15 or until funds 

are depleted 

N/A 

90 days 

N/A 

N/A 

Yes 

None 

This product provides funds for eligible purchase and/or rehabilitation transactions as defined by the terms 

and conditions of each of the FHLB of Atlanta’s agreements with state or local government, quasi-governmental 

entities, or other organizations to deliver AHP-compliant products in collaboration with the FHLB of Atlanta. The 

specific terms of any SPP offered by the FHLB of Atlanta are available at 

http://corp.fhlbatl.com/resources/structured-partnership-product/ 

HELPFUL WEB LINKS 

FHLB of Atlanta Webinars 

http://corp.fhlbatl.com/who-we-are/webinars/ 

Frequently asked questions about FHLB Atlanta 

http://corp.fhlbatl.com/faqs/

Product Brochures 

http://corp.fhlbatl.com/resources/product-brochures/ 

AHP Income Calculator 

http://corp.fhlbatl.com/services/affordable-housing-programs/ahp-income-calculator 
FDIC | Affordable Mortgage Lending Guide

FEDERAL HOME LOAN BANKS

FHLB of Boston Overview

http://www.fhlbboston.com

Year Total Homeownership SetAside Volume Distributed

Number of 

Homeownership 

Set-Aside Transactions

Total AHP Competitive 

Program Volume 

Distributed

Total AHP Competitive 

Program Transactions

2015 $2.8 million 262 $15.2 million 51

2014 $3.4 million 254 $9.9 million 49

2013 $3.5 million 274 $8.7 million 41

2012 $2.1 million 219 $4.8 million 28

2011 $1.5 million 161 $5.7 million 23

Affordable Lending Services Affordable Lending Products 

• Community Development Consultations that • Community Investment Advances

facilitate business development and CRA oppor- • Competitive Affordable Housing Program tunities for members

• Homeownership Set-Aside Specialized Programs • Outreach and convenings on affordable housing 

and community economic development issues • Mortgage Partnership Finance® Program

• Member Webinars and Training • Jobs for New England

• Marketing Materials • Helping to House New England

• Programmatic Technical Assistance on Housing 

and Community Investment Programs

HISTORICAL VOLUME 

States Served: Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island, and Vermont

Contact Information: http://www.fhlbboston.com/aboutus/contactus/index.jsp

Training Events and http://fhlbboston.com/events/ Webinars: 
FDIC | Affordable Mortgage Lending Guide

FHLB OF BOSTON MPF PROGRAM PRODUCTS 

Credit Enhanced Non-credit Enhanced 

MPF MPF MPF Original MPF 125 MPF 35 MPF Xtra MPF Direct Government Government MBS 

FHLB OF BOSTON HOMEOWNERSHIP SET-ASIDE SPECIALIZED PROGRAMS 

Note that for all programs the retention period is five years. 

Homeownership Set-Aside Program Operations 

Process for reserving and applying for funding: Automated 

Time from application to funding: Enrollments expire after 90 days; for disbursement requests, allow 15 business 

days to review/approve. 

Security documents needed: Recorded lien 

Fund distribution: First come, first served 

Equity Builder Program 

This program provides up to $15,000 for down 

payment and closing cost assistance, homebuyer 

counseling costs, and/or rehabilitation costs to 

eligible homebuyers. 

Target populations None 

Per-member limit $110,000 

Maximum award $11,000 per unit

Maximum % AMI 80% 

Funding Period Two funding rounds 

Time frame, purchase 90 days 

Time frame, 90 days rehabilitation 

Time frame, Individual

Development Account Determined by IDA 

(IDA) 

% for first-time First 33% homebuyers 

Homeownership Yes Counseling Required 

Subsidy match None required 

HELPFUL WEB LINKS 

FHLB of Boston Member Center 

http://www.fhlbboston.com/members/index.jsp 

FHLB of Boston credit products overview 

http://www.fhlbboston.com/productsandservices/

creditproducts/index.jsp

FHLB of Boston Community Development Advances 

Overview 

http://www.fhlbboston.com/communitydevelopment/cda/

index.jsp 

FHLB of Boston Affordable Housing Program 

Implementation Plan

http://www.fhlbboston.com/communitydevelopment/

ahp/03_01_06_implementation.jsp

FHLB of Boston Mortgage Partnership Finance® Overview

http://www.fhlbboston.com/productsandservices/

mortgagepartnershipfinance/index.jsp
FDIC | Affordable Mortgage Lending Guide

FEDERAL HOME LOAN BANKS 

FHLB of Chicago Overview 

https://www.fhlbc.com 

States Served: Illinois and Wisconsin 

Contact Information: http://www.fhlbc.com/OurCompany/Pages/federal-home-loan-bank-Chicago-contacts.aspx 

Training Events and 

Webinars: https://www.fhlbc.com/Events/Pages/default.aspx

Affordable Lending Services 

• Business Development Services (facilitate

member meetings with realtors, builders, etc.)

• Webinars and Training

• Programmatic Technical Assistance that

includes how members can employ Community

Investment programs to achieve CRA and community investment goals

• Marketing Materials

HISTORICAL VOLUME 

Number of Total Homeownership Set- Year Homeownership Aside Volume Distributed Set-Aside Transactions 

Affordable Lending Products 

• Community Investment Advances

• Competitive Affordable Housing Program

• Homeownership Set-Aside Specialized Programs

• Mortgage Partnership Finance® Program

Total AHP Competitive 

Program Volume 

Distributed 

Total AHP Competitive 

Program Transactions 

2015 $16.3 million 2,728 $35.6 million 74 

2014 $18.2 million 2,339 $21.9 million 43 

2013 $12.1 million 1,822 $29.6 million 104 

2012 $14.8 million 1,827 $20.6 million 62 

2011 $10.2 million 1,315 $24.2 million 79 
FDIC | Affordable Mortgage Lending Guide

FHLB OF CHICAGO MPF PROGRAM PRODUCTS 

Credit Enhanced Non-credit Enhanced 

MPF MPF MPF Original MPF 125 MPF 35 MPF Xtra MPF Direct Government Government MBS 

FHLB OF CHICAGO HOMEOWNERSHIP SET-ASIDE SPECIALIZED PROGRAMS 

Note that for all programs the retention period is five years. 

Homeownership Set-Aside Program Operations 

Process for reserving and applying for funding: Automated 

Time from application to funding: Members reserve funds during the program year. Disbursement occurs after the 

member has closed the transactions. Turnaround times on reservations and disbursements depend on the volume 

of activity. 

Security documents needed: Deed restriction; members are required to execute and record a retention vehicle 

that enumerates the requirements of the AHP regulations. 

Fund distribution: First come, first served 
FDIC | Affordable Mortgage Lending Guide

Downpayment Plus® 

FHLB Chicago members enrolled in the Downpayment 

Plus Program (DPP®) may access subsidies of up 

to $6,000 per household on behalf of eligible 

homebuyers to whom they are funding or originating 

first mortgages. The subsidy may be used for down 

payment and closing cost assistance, homebuyer 

counseling costs (up to $700), and/or eligible 

rehabilitation costs associated with the purchase of a 

home. Household income and other restrictions apply. 

Target populations None 

Per-member limit $420,000 

Maximum award Lesser of $6,000 or three times the 

per unit homebuyer’s net contribution 

Maximum % AMI 80% 

Funding Period N/A 

Time frame, purchase 90 days 

Time frame, N/A rehabilitation 

Time frame, Individual

Development Account N/A

(IDA) 

% for first-time 33% homebuyers 

Homeownership Yes Counseling Required 

Minimum borrower contribution Subsidy match $1,000 

HELPFUL WEB LINKS 

FHLB of Chicago Advances Overview 

Downpayment Plus Advantage® 

This program is designed for households 

participating in homeownership programs offered 

by nonprofit organizations that provide mortgage 

financing directly to the homebuyer. The nonprofits 

must work with an FHLB member, to access the 

program. This program provides up to $6,000 

for down payment and closing cost assistance, 

homebuyer counseling costs (up to $700), and/or 

rehabilitation costs to eligible homebuyers. 

Borrowers receiving firstTarget populations mortgage financing from a 

nonprofit organization 

Per-member limit $420,000 

Maximum award $6,000 per unit

Maximum % AMI 80% 

Funding Period N/A 

Time frame, purchase 90 days 

Time frame, N/A rehabilitation 

Time frame, Individual

Development Account N/A

(IDA) 

% for first-time 33% homebuyers 

Homeownership Yes Counseling Required 

Minimum borrower contribution Subsidy match $1,000 

https://www.fhlbc.com/ProductsandServices/LiquidityandFunding/Pages/default.aspx

FHLB of Chicago Community Investment and Affordable Housing Programs Overview

https://www.fhlbc.com/ProductsandServices/CommunityInvestmentsandAffordableHousingPrograms/Pages/default.aspx 

FHLB of Chicago MPF Program

https://www.fhlbc.com/ProductsandServices/MPFProgram/Pages/default.aspx 
FDIC | Affordable Mortgage Lending Guide

FEDERAL HOME LOAN BANKS 

FHLB of Cincinnati Overview 

https://www.fhlbcin.com 

States Served: Kentucky, Ohio, Tennessee 

Contact Information: https://www.fhlbcin.com/contact-us 

Training Events and 

Webinars: https://www.fhlbcin.com/community-investment/webinars-and-presentations/

Affordable Lending Services Affordable Lending Products 

• Business Development Services • Community Investment Advances

• CRA Training Services • Competitive Affordable Housing Program

• Member Webinars and Training • Homeownership Set-Aside Specialized Programs

• Mortgage Purchase Program FHLB of Cincinnati Mortgage Purchase Products 

• MPP Advantage

HISTORICAL VOLUME 

Year Total Homeownership SetAside Volume Distributed 

2015 $9.1 million 

2014 $10.4 million 

2013 $8.6 million 

2012 $5.2 million 

2011 $6.4 million 

Number of 

Homeownership

Set-Aside Transactions 

1,869 

2,122 

1,751 

1,112 

1,399 

Total AHP Competitive 

Program Volume 

Distributed 

$27.0 million 

$28.0 million 

$24.7 million 

$19.4 million 

$21.8 million 

Total AHP Competitive 

Program Transactions 

70 

78 

67 

69 

54 
FDIC | Affordable Mortgage Lending Guide

FHLB OF CINCINNATI HOMEOWNERSHIP SET-ASIDE SPECIALIZED PROGRAMS 

Note that for all programs the retention period is five years. 

Homeownership Set-Aside Program Operations 

Process for reserving and applying for funding: Automated 

Time from application to funding: 4-5 weeks 

Security documents needed: Deed restriction 

Fund distribution: First come, first served 

Welcome Home 

This program provides up to $5,000 for down 

payment and closing costs assistance to eligible homebuyers. 

Target populations 

Per-member limit

Maximum award 

per unit 

Maximum % AMI 

Funding Period 

Time frame, purchase 

Time frame,

rehabilitation 

Time frame, Individual

Development Account

(IDA) 

% for first-time 

homebuyers 

Homeownership

Counseling Required 

Subsidy match 

None 

$200,000 

$5,000 

80% 

March 2 — December 1 

60 days 

N/A 

N/A 

33% 

Yes 

Minimum $500 

HELPFUL WEB LINKS 

FHLB of Cincinnati Credit Services 

https://www.fhlbcin.com/our-members/credit-services/ 

FHLB of Cincinnati Mortgage Purchase Program

https://www.fhlbcin.com/our-members/mortgage-purchase-program/ 

FHLB of Cincinnati Community Investment and Affordable Housing Programs

https://www.fhlbcin.com/our-members/community-investment/ 
FDIC | Affordable Mortgage Lending Guide

FEDERAL HOME LOAN BANKS 

FHLB of Dallas Overview 

https://www.fhlb.com 

States Served: Arkansas, Louisiana, Mississippi, New Mexico, and Texas 

Contact Information: https://www.fhlb.com/Pages/Contact-Us.aspx 

Training Events and https://www.fhlb.com/News/Pages/Upcoming-Events.aspx Webinars: 

Affordable Lending Services 

• CRA Training Services

Affordable Lending Products 

• Community Investment Advances

• Competitive Affordable Housing Program

• Homeownership Set-Aside Specialized Programs

• Mortgage Partnership Finance® Program

HISTORICAL VOLUME 

Year Total Homeownership SetAside Volume Distributed 

2016 $2.0 million 

2015 $2.5 million 

2014 $2.8 million 

2013 $2.0 million 

2012 $2.3 million 

2011 $3.8 million 

Number of 

Homeownership

Set-Aside Transactions 

407 

518 

596 

434 

492 

698 

Total AHP Competitive 

Program Volume 

Distributed 

$7.8 million 

$8.1 million 

$9.8 million 

$11.3 million 

$8.3 million 

$11.0 million 

Total AHP Competitive 

Program Transactions 

27 

34 

33 

36 

31 

53 
FDIC | Affordable Mortgage Lending Guide

FHLB OF DALLAS MPF PROGRAM PRODUCTS 

Credit Enhanced Non-credit Enhanced 

MPF Original MPF 125 MPF 35 MPF Xtra MPF Direct MPF 

Government 

MPF 

Government 

MBS 

FHLB OF DALLAS HOMEOWNERSHIP SET-ASIDE SPECIALIZED PROGRAMS 

Note that for all programs the retention period is five years. 

Homeownership Set-Aside Program Operations 

Process for reserving and applying for funding: Manual 

Time from application to funding: 5-7 business days 

Security documents needed: Deed restriction 

Fund distribution: First come, first served 

Homebuyer Equity Leverage Partnership 

Program 

This program provides up to $7,000 for down 

payment and closing costs assistance for first-time 

homebuyers. 

Target populations First-time homebuyers 

$50,000 for every $1 million Per-member limit available 

Maximum award $7,000 per unit

Maximum % AMI 80% 

Funding Period All year, or until funds are committed 

Time frame, purchase 30 days from application 

Time frame, N/A rehabilitation 

Time frame, Individual

Development Account N/A

(IDA) 

% for first-time 100% homebuyers 

Homeownership Yes Counseling Required 

Subsidy match Minimum contribution $500 

Special Needs Assistance Program 

This program provides up to $6,000 to special needs 

households for the repair and/or rehabilitation of an 

owner-occupied home for eligible homebuyers. 

Target populations Special needs rehabilitation 

$50,000 for every $1 million Per-member limit available 

Maximum award $6,000 per unit

Maximum % AMI 80% 

Funding Period All year, or until funds are committed 

Time frame, purchase N/A 

Time frame, 60 days rehabilitation 

Time frame, Individual

Development Account N/A

(IDA) 

% for first-time N/A homebuyers 

Homeownership No Counseling Required 

Subsidy match None 
FDIC | Affordable Mortgage Lending Guide

Housing Assistance for Veterans Program 

This program, which is voluntarily funded by the FHLB 

of Dallas, provides up to $7,500 for the necessary 

modifications to homes of U.S. veterans and activeduty personnel, disabled by active military service 

since September 11, 2001 (no retention period for 

this program). 

Veterans and active-duty personnel 

Target populations disabled by active military since

September 11, 2001 

Per-member limit $75,000 

Maximum award $7,500 per unit

Maximum % AMI 120% 

All year, or until funds are Funding Period committed 

Time frame, purchase N/A 

Time frame, 60 days rehabilitation 

Time frame, Individual

Development Account N/A

(IDA) 

% for first-time N/A homebuyers 

Homeownership No Counseling Required 

Subsidy match None 

HELPFUL WEB LINKS 

FHLB of Dallas Advances 

https://www.fhlb.com/products/Pages/Advances.aspx 

FHLB of Dallas Affordable Housing and Community Investment Programs

https://www.fhlb.com/community/Pages/Community-Investment.aspx 

FHLB of Dallas Mortgage Partnership Finance®

https://www.fhlb.com/products/Pages/Mortgage-Partnership-Finance.aspx 
FDIC | Affordable Mortgage Lending Guide

FEDERAL HOME LOAN BANKS 

FHLB of Des Moines Overview 

http://www.fhlbdm.com 

States Served: 

Contact Information: 

Training Events and 

Webinars: 

Alaska, Hawaii, Idaho, Iowa, Minnesota, Missouri, Montana, North Dakota, Oregon,

South Dakota, Utah, Washington and Wyoming 

http://www.fhlbdm.com/contact-us/ 

http://members.fhlbdm.com/educational-member-resources/ 

Affordable Lending Products 

• Competitive Affordable Housing Program

• Homeownership Set-Aside Specialized Programs

• Mortgage Partnership Finance® Program

HISTORICAL VOLUME 

Year Total Homeownership SetAside Volume Distributed 

2016 $5.5 million 

2015 $3.5 million 

2014 $3.8 million 

2013 $3.2 million 

2012 $2.7 million 

2011 $2.0 million 

Number of 

Homeownership

Set-Aside Transactions 

1,343 

998 

1,017 

815 

723 

605 

Total AHP Competitive 

Program Volume 

Distributed 

$14.9 million 

$16.1 million 

$11.7 million 

$13.8 million 

$15.1 million 

$14.4 million 

Total AHP Competitive 

Program Transactions 

154 

172 

175 

166 

155 

142 
FDIC | Affordable Mortgage Lending Guide

FHLB OF DES MOINES MPF PROGRAM PRODUCTS 

Credit Enhanced Non-credit Enhanced 

MPF MPF MPF Original MPF 125 MPF 35 MPF Xtra MPF Direct Government Government MBS 

FHLB OF DES MOINES HOMEOWNERSHIP SET-ASIDE SPECIALIZED PROGRAMS 

Note that for all programs the retention period is five years. 

Homeownership Set-Aside Program Operations 

Process for reserving and applying for funding: Automated 

Time from application to funding: 20 business days 

Security documents needed: Deed restriction 

Fund distribution: First come, first served 

Home$tart 

This program provides up to $7,500 for down 

payment, closing costs, counseling, or rehabilitation 

assistance to eligible homebuyers. 

Target populations None 

Per-member limit $250,000 

Maximum award 

per unit $7,500 

Maximum % AMI 80% 

Funding Period Continuous 

Time frame, purchase 120 days 

Time frame,

rehabilitation One year 

Time frame, Individual

Development Account

(IDA) 

N/A 

% for first-time 

homebuyers 33% 

Homeownership

Counseling Required Yes, for first-time homebuyers 

Subsidy match None 

Home$tart Plus 

This program provides up to $15,000 for down 

payment, closing costs, counseling, or rehabilitation 

assistance to eligible homebuyers on public assistance. 

Target populations Recipient of public housing 

assistance 

Per-member limit $100,000 

Maximum award 

per unit $15,000 

Maximum % AMI 80% 

Funding Period Continuous 

Time frame, purchase 120 days 

Time frame,

rehabilitation One year 

Time frame, Individual

Development Account

(IDA) 

N/A 

% for first-time 

homebuyers 33% 

Homeownership

Counseling Required Yes, for first-time homebuyers 

Subsidy match None 
FDIC | Affordable Mortgage Lending Guide

Native American Homeownership Initiative 

This program provides up to $15,000 for down 

payment, closing costs, counseling, or rehabilitation 

assistance to eligible Native American, Native Alaskan, 

or Native Hawaiian households. 

Target populations 

Per-member limit 

Maximum award 

per unit 

Maximum % AMI 

Funding Period 

Time frame, purchase 

Time frame,

rehabilitation 

Time frame, Individual

Development Account

(IDA) 

% for first-time 

homebuyers 

Homeownership

Counseling Required 

Subsidy match 

Native American households 

$100,000 

$15,000 

80% 

Continuous 

120 days 

One year 

N/A 

N/A 

Yes, for first-time homebuyers 

None 

HELPFUL WEB LINKS 

FHLB Des Moines Advances 

http://members.fhlbdm.com/advance-rates/ 

FHLB Des Moines Mortgage Partnership Finance®

http://members.fhlbdm.com/

mortgage-partnership-finance-mpf/

FHLB Des Moines Affordable Housing Products

http://www.fhlbdm.com/affordable-housing-products/ 

FHLB Des Moines Educational Resources 

http://members.fhlbdm.com/

educational-member-resources/ 
FDIC | Affordable Mortgage Lending Guide

FEDERAL HOME LOAN BANKS 

FHLB of Indianapolis Overview 

https://www.fhlbi.com 

States Served: Indiana and Michigan 

Contact Information: https://www.fhlbi.com/contact-us 

Training Events and 

Webinars: https://www.fhlbi.com/events

Affordable Lending Services FHLB of Indianapolis Mortgage Purchase 

Program Products • Business Development Services

• Mortgage Purchase Program

Affordable Lending Products 

• Community Investment Advances

• Competitive Affordable Housing Program

• Homeownership Set-Aside Specialized Programs

• Mortgage Purchase Program

HISTORICAL VOLUME 

Year Total Homeownership SetAside Volume Distributed 

2016 $5 million 

2015 $5.1 million 

2014 $7.6 million 

2013 $6.6 million 

2012 $5.3 million 

2011 $5.3 million 

Number of 

Homeownership

Set-Aside Transactions 

595 

631 

987 

741 

743 

754 

Total AHP Competitive 

Program Volume 

Distributed 

$9.5 million 

$10.9 million 

$17.6 million 

$12.7 million 

$10.5 million 

$13.3 million 

Total AHP Competitive 

Program Transactions 

24 

24 

43 

33 

27 

24 
FDIC | Affordable Mortgage Lending Guide

FHLB OF INDIANAPOLIS HOMEOWNERSHIP SET-ASIDE SPECIALIZED PROGRAMS 

Note that for all programs the retention period is five years. 

Homeownership Set-Aside Program Operations 

Process for reserving and applying for funding: Manual 

Time from application to funding: 10 business days 

Security documents needed: Deed restriction 

Fund distribution: First come, first served 

Homeownership Opportunities Program 

This program provides up to $8,000 for down 

payment and closing costs assistance for eligible firsttime homebuyers. 

Target populations First-time homebuyers 

Per-member limit $500,000 

Maximum award 

per unit up to $8,000 

Maximum % AMI 80% 

Funding Period Spring release 

Time frame, purchase 30 days 

Time frame,

rehabilitation N/A 

Time frame, Individual

Development Account

(IDA) 

N/A 

% for first-time 

homebuyers 100% 

Homeownership

Counseling Required Yes 

Subsidy match 3:1 match required if non-member 

first mortgage.31 Minimum $1,000 

Accessibility Modifications Program 

This program provides up to $15,000 for modifications 

that assist with aging in place and independent living 

for eligible senior or disabled homeowners. 

Seniors, households with disabled 

persons 

$300,000 

$15,000 

80% 

Spring release 

N/A 

180 days 

N/A 

N/A 

Encouraged but not required 

None 

Target populations 

Per-member limit 

Maximum award 

per unit 

Maximum % AMI 

Funding Period 

Time frame, purchase 

Time frame,

rehabilitation 

Time frame, Individual

Development Account

(IDA) 

% for first-time 

homebuyers 

Homeownership

Counseling Required 

Subsidy match 

31 Non-member first mortgages are those that are originated by banks that are 

not FHLB members. 
FDIC | Affordable Mortgage Lending Guide

Neighborhood Impact Program 

This program provides up to $7,500 for eligible repairs 

and maintenance costs including new windows, 

furnaces, water heaters, gutters, and insulation for 

eligible homeowners. 

Target populations None 

Per-member limit $300,000 

Maximum award 

per unit $7,500 

Maximum % AMI 80% 

Funding Period Spring release 

Time frame, purchase 30 days 

Time frame,

rehabilitation 180 days 

Time frame, Individual

Development Account

(IDA) 

N/A 

% for first-time 

homebuyers N/A 

Homeownership

Counseling Required No 

Subsidy match None 

HELPFUL WEB LINKS 

FHLB Indianapolis Credit Services

https://www.fhlbi.com/products-services/credit-services 

FHLB Indianapolis Affordable Housing Programs

https://www.fhlbi.com/products-services/communities-and-housing/affordable-housing-program 

FHLB Indianapolis Community Investment Program

https://www.fhlbi.com/products-services/communities-and-housing/community-investment-program 

FHLB Indianapolis Mortgage Purchase Program

https://www.fhlbi.com/products-services/mortgage-purchase-program 

FHLB Indianapolis Training Events

https://www.fhlbi.com/events 
FDIC | Affordable Mortgage Lending Guide

FEDERAL HOME LOAN BANKS 

FHLB of New York Overview 

http://www.fhlbny.com 

States Served: New Jersey, New York, Puerto Rico, and the U.S. Virgin Islands 

Contact Information: http://www.fhlbny.com/about-us/bank-contacts.aspx 

Training Events and http://www.fhlbny.com/news-events/events.aspx Webinars: 

Affordable Lending Products 

• Community Lending Program Advances

• Competitive Affordable Housing Program

• Homeownership Set-Aside Specialized Programs

• Mortgage Partnership Finance® Program

HISTORICAL VOLUME 

Year Total Homeownership SetAside Volume Distributed 

2016 $13.5 million 

2015 $14.8 million 

2014 $12.0 million 

2013 $10.7 million 

2012 $6.7 million 

2011 $5.8 million 

Number of 

Homeownership

Set-Aside Transactions 

1,693 

1,857 

1,519 

1,357 

852 

753 

Total AHP Competitive 

Program Volume 

Distributed 

$34.4 million 

$32.3 million 

$32.7 million 

$35.2 million 

$26.3 million 

$32.7 million 

Total AHP Competitive 

Program Transactions 

130 

73 

98 

112 

96 

154 
FDIC | Affordable Mortgage Lending Guide

FHLB OF NEW YORK MPF PROGRAM PRODUCTS 

Credit Enhanced Non-credit Enhanced 

MPF Xtra MPF Direct 

MPF 

Government 

MBS 

MPF Original MPF 35 MPF 

Government MPF 125 

FHLB OF NEW YORK HOMEOWNERSHIP SET-ASIDE SPECIALIZED PROGRAMS 

Note that for all programs the retention period is five years. 

Homeownership Set-Aside Program Operations 

Process for reserving and applying for funding: Manual 

Time from application to funding: 60-90 days 

Security documents needed: Declaration of Restrictive Covenant for FHA financing only. For all other financing a 

recorded subordinate mortgage is used. 

Fund distribution: Allocated 

First Home Club 

This program provides up to $7,500 in matching 

funds for the down payment and closing costs of firsttime homebuyers with an additional $500 available 

to nonprofit counseling agencies for cost defrayment. 

Total grant opportunity of $8,000. 

Target populations First-time homebuyers 

Per-member limit Based on member enrollment 

Maximum award 

per unit 

$7,500 (plus up to $500 for

counseling) 

Maximum % AMI 80% 

Funding Period Monthly funding 

Time frame, purchase 2 years 

Time frame,

rehabilitation N/A 

Time frame, Individual

Development Account

(IDA) 

Minimum 10 months 

% for first-time 

homebuyers 100% 

Homeownership

Counseling Required Yes 

Subsidy match 

4:1 match based on household 

savings to maximum grant amount of

$7,500 

HELPFUL WEB LINKS 

FHLB New York Credit Services 

http://www.fhlbny.com/business-lines/credit-products.aspx 

FHLB New York Mortgage Partnership Finance®

http://www.fhlbny.com/business-lines/

mpf-program/index.aspx 

FHLB New York Affordable Housing Programs

http://www.fhlbny.com/community/housing-programs/

index.aspx 

FHLB New York Community Investment Programs

http://www.fhlbny.com/community/community-lendingprograms/index.aspx 

FHLB New York Training Events

http://www.fhlbny.com/news-events/events.aspx 
FDIC | Affordable Mortgage Lending Guide

FEDERAL HOME LOAN BANKS 

FHLB of Pittsburgh Overview 

http://www.fhlb-pgh.com 

States Served: Delaware, Pennsylvania, and West Virginia 

Contact Information: https://www.fhlb-pgh.com/contact 

Community Products: https://www.fhlb-pgh.com/community-products 

Affordable Lending Products 

• Competitive Grant Product: Affordable Housing Program

• Advance Product: Community Lending Program

• Recoverable Assistance Product: Banking On Business

• Homeownership Set-Aside Grant Program: First Front Door

• Mortgage Partnership Finance® Program

HISTORICAL VOLUME 

Number of Total AHP Competitive Total Homeownership Set- Year Homeownership Program Volume Aside Volume Distributed Set-Aside Transactions Distributed 

2016 $6.5 million 1,372 $23.1 million 

2015 $2.9 million 613 $24.6 million 

2014 $4.0 million 834 $15.0 million 

2013 $1.0 million 215 $13.6 million 

2012 $4.9 million 

2011 $3.0 million 

Total AHP Competitive 

Program Transactions 

50 

65 

38 

42 

23 

14 
FDIC | Affordable Mortgage Lending Guide

FHLB OF PITTSBURGH MPF PROGRAM PRODUCTS 

Credit Enhanced Non-credit Enhanced 

MPF MPF MPF Original MPF 125 MPF 35 MPF Xtra MPF Direct Government Government MBS 

FHLB OF PITTSBURGH HOMEOWNERSHIP SET-ASIDE SPECIALIZED PROGRAMS 

Note that for all programs the retention period is five years. 

Homeownership Set-Aside Program Operations 

Process for reserving and applying for funding: Automated system, First Front Door Online 

Time from application to reservation: 10 business days; first come, first served 

Security documents needed: Deed restriction; recorded lien 

Fund distribution: Homebuyers have six months to use reservation 

First Front Door HELPFUL WEB LINKS 

This program provides up to $5,000 in matching FHLB of Pittsburgh Credit Products 

funds for the down payment and closing costs of first- https://www.fhlb-pgh.com/advances 

time homebuyers. 

Target populations 

Per-member limit 

Maximum award 

per unit 

Maximum % AMI 

Funding Period 

Time frame, purchase 

Time frame,

rehabilitation 

Time frame, Individual

Development Account

(IDA) 

% for first-time 

homebuyers 

Homeownership

Counseling Required 

Subsidy match 

FHLB Pittsburgh Affordable Housing and Community 

Investment Programs

https://www.fhlb-pgh.com/community-products First-time homebuyers 

FHLB Pittsburgh Mortgage Partnership Finance®

N/A https://www.fhlb-pgh.com/mpf 

$5,000 

80% 

Annual allocation 

180 days 

N/A 

N/A 

100% 

Yes 

3:1 match 
FDIC | Affordable Mortgage Lending Guide

FEDERAL HOME LOAN BANKS 

FHLB of San Francisco Overview 

http://www.fhlbsf.com 

States Served: Arizona, California, and Nevada 

Contact Information: http://www.fhlbsf.com/contact.aspx 

Training Events and 

Webinars: http://www.fhlbsf.com/events/default.aspx

Affordable Lending Services • Community Works on-line newsletter, highlighting

FHLB San Francisco affordable lending activities • Business Development Services

• Financial Literacy Services (funding through Affordable Lending Products 

AHEAD Program grants and certain costs • Community Investment Advances and Letters for home purchase counseling supported in of Credit

connection with Set-Aside Programs)

• Competitive Affordable Housing Program • CRA training opportunities in partnership with

the Federal Reserve Bank of San Francisco, and • Homeownership Set-Aside Specialized Programs

regional offices of the FDIC, OCC, and other • Mortgage Partnership Finance® Program

regulatory agencies

• Outreach, training, and technical assistance for

Community Investment programs and products

HISTORICAL VOLUME 

Year Total Homeownership SetAside Volume Distributed 

2016 $7.1 million 

2015 $6.7 million 

2014 $8.4 million 

2013 $6.2 million 

2012 $10.2 million 

2011 $8.9 million 

Number of 

Homeownership

Set-Aside Transactions 

511 

476 

602 

448 

788 

679 

Total AHP Competitive 

Program Volume 

Distributed 

$51 million 

$48.8 million 

$35.4 million 

$40.1 million 

$58.8 million 

$44.9 million 

Total AHP Competitive 

Program Transactions 

77 

74 

69 

80 

115 

109 
FDIC | Affordable Mortgage Lending Guide

FHLB OF SAN FRANCISCO MPF PROGRAM PRODUCTS 

Credit Enhanced Non-credit Enhanced 

MPF MPF MPF Original MPF 125 MPF 35 MPF Xtra MPF Direct Government Government MBS 

FHLB OF SAN FRANCISCO HOMEOWNERSHIP SET-ASIDE SPECIALIZED PROGRAMS 

Note that for all programs the retention period is five years. 

Homeownership Set-Aside Program Operations 

Process for reserving and applying for funding: Manual: members submit completed application forms via a webbased secure portal.

Time from application to funding: Members reserve set-aside funds once a year. The Bank disburses funds as 

needed by members throughout the year.

Security documents needed: Recorded lien 

Fund distribution: Allocated 
FDIC | Affordable Mortgage Lending Guide

 

Individual Development and Empowerment

Account (IDEA) Program 

This program provides up to $15,000 in matching 

funds for the down payment and closing costs of 

eligible first-time homebuyers who have saved through 

an Individual Development Account (IDA) or are 

participating in a family self-sufficiency or lease-to-own 

program leading to homeownership. 

Target populations First-time homebuyers 

Per-member limit Combined $4,000,000 of IDEA and 

WISH funds 

Maximum award 

per unit 

Lesser of $15,000 or three times the 

homebuyer’s contribution 

Maximum % AMI 80% 

Funding Period Reimbursement basis during 

reservation year 

Time frame, purchase Within 5 years of program enrollment 

Time frame,

rehabilitation N/A 

Time frame, Individual

Development Account

(IDA) 

Determined by IDA 

% for first-time 

homebuyers 100% 

Homeownership

Counseling Required Yes 

Subsidy match 3:1 match 

Target populations First-time homebuyers 

Per-member limit Combined $4,000,000 of IDEA and 

WISH funds 

Maximum award 

per unit 

Lesser of $15,000 or three times the 

homebuyer’s contribution 

Maximum % AMI 80% 

Funding Period Reimbursement basis during 

reservation year 

Time frame, purchase Within 1 year of program enrollment 

Time frame,

rehabilitation N/A 

Time frame, Individual

Development Account

(IDA) 

N/A 

% for first-time 

homebuyers 100% 

Homeownership

Counseling Required Yes 

Subsidy match 3:1 match 

HELPFUL WEB LINKS

Workforce Initiative Subsidy for Homeownership 

(WISH) Program 

This program provides up to $15,000 in matching 

funds for the down payment and closing costs of 

eligible first-time homebuyers. 

FHLB San Francisco Member Services (including list of credit products) 

http://www.fhlbsf.com/member/default.aspx 

FHLB San Francisco Affordable Housing and Community Investment Programs

http://www.fhlbsf.com/community/default.aspx 

FHLB San Francisco Training Events

http://www.fhlbsf.com/events/default.aspx 
FDIC | Affordable Mortgage Lending Guide

FEDERAL HOME LOAN BANKS 

FHLB of Topeka Overview 

http://www.fhlbtopeka.com 

States Served: Colorado, Kansas, Nebraska, and Oklahoma 

Contact Information: https://www.fhlbtopeka.com/about-us-contact-us 

Training Events and https://www.fhlbtopeka.com/events Webinars: 

Affordable Lending Services 

• Business Development Services

• Financial Literacy Services

HISTORICAL VOLUME 

Year Total Homeownership SetAside Volume Distributed 

2016 $4.2 million 

2015 $4.0 million 

2014 $8.3 million 

2013 $3.8 million 

2012 $1.8 million 

2011 $1.6 million 

Affordable Lending Products 

• Competitive Affordable Housing Program

• Homeownership Set-Aside Specialized Programs

• Mortgage Partnership Finance® Program

Number of 

Homeownership

Set-Aside Transactions 

848 

547 

1,122 

697 

459 

394 

Total AHP Competitive 

Program Volume 

Distributed 

$7 million 

$10.5 million 

$11.6 million 

$10.7 million 

$8.8 million 

$7.1 million 

Total AHP Competitive 

Program Transactions 

21 

22 

25 

37 

29 

30 
FDIC | Affordable Mortgage Lending Guide

FHLB OF TOPEKA MPF PROGRAM PRODUCTS 

Credit Enhanced Non-credit Enhanced 

MPF Original MPF 125 MPF 35 MPF Xtra MPF Direct MPF 

Government 

MPF 

Government 

MBS 

FHLB OF TOPEKA HOMEOWNERSHIP SET-ASIDE SPECIALIZED PROGRAMS 

Note that for all programs the retention period is five years. 

Homeownership Set-Aside Program Operations 

Process for reserving and applying for funding: Manual 

Time from application to funding: The reservation is followed by disbursement after the member has closed the 

transaction. Total turn-around time for both processes is approximately 30 days. 

Security documents needed: Retention agreement 

Fund distribution: First come, first served 

Homeownership Set-aside Program HELPFUL WEB LINKS 

This program provides up to $5,000 for down FHLB Topeka Advances 

payment and closing cost assistance, homebuyer https://www.fhlbtopeka.com/advances 

counseling costs, and/or rehabilitation costs to FHLB Topeka Affordable Housing Programs 

eligible homebuyers. https://www.fhlbtopeka.com/community-programs-grants 

FHLB Topeka Community Development Program 

(Community Advances) Target populations First-time homebuyers https://www.fhlbtopeka.com/community-programs-advances 

Per-member limit $25,000 per member, per month FHLB Topeka Mortgage Partnership Finance®

https://www.fhlbtopeka.com/mpf Maximum award $5,000 per unit FHLB Topeka Training Events 

https://www.fhlbtopeka.com/events Maximum % AMI 80% 

Funding Period Continuous 

Time frame, purchase Not indicated 

Time frame, N/A rehabilitation 

Time frame, Individual

Development Account N/A

(IDA) 

% for first-time 100% homebuyers 

Homeownership Yes Counseling Required 

Subsidy match Minimum $500 
 

 

ACKNOWLEDGMENTS 

The Federal Deposit Insurance Corporation’s (FDIC’s) Division of Depositor and Consumer Protection (DCP) 

created the Affordable Mortgage Lending Guide through its Community Affairs Branch under the guidance of 

Elizabeth Ortiz, Deputy Director, Janet Gordon, Associate Director, and Lessie Evans, Section Chief. Sandra Kerr 

coordinated the publication with contributions from Surya Sen, Patience Singleton, Cassandra Duhaney, Harriet 

Newburger, and Ryan Goodstein, Policy and Research Branch; Valerie Williams, Teresa Perez, and Ron Jauregui, 

Community Affairs Branch. 

The Urban Institute’s Housing Finance Policy Center served as the contractor for this publication. Laurie Goodman 

directed the Housing Finance Policy Center’s research. Other contributors were Karan Kaul, Sonia Garrison, 

Ellen Seidman, Sheryl Pardo, Bing Bai, Wei Li, Jun Zhu, and Alison Rincon. Design by Christina Friehauf. Taz 

George made significant contributions to the Affordable Mortgage Lending Guide, Part I: Federal Agencies and 

Government Sponsored Enterprises. 

The Federal Home Loan Banks substantially contributed to this publication, led by Arthur L. Fleming, 

FHLB of Atlanta.