Federal Banks are different than regular commercial banks. Membership is by banks as opposed to membership by individuals. However, as the name implies, they do have both direct and indirect effects on the housing market in the form of stabilizing programs that help member banks deal with market volatilities. The details of their programs are very sophisticated and mostly deal with providing financial flexibility in cash flow and interest rate fluctuations. The Affordable Housing Program funds are intended to assist FHLB Dallas members in financing the purchase, construction, and/or rehabilitation of owner-occupied, rental, transitional housing, as well as housing for homeless individuals in their community. The Affordable Housing Program funds must be used to benefit households with incomes at or below 80 percent of the median income for the area.
Supporting Community Development
Federal Banks also enter the market and directly help their member institutions through their Community Investment Program advances (or loans) that allow members to fund affordable housing while maintaining profit margins and minimizing risk. Members can obtain discounted advances that are priced up to 10 basis points below regular commercial advances to support qualified affordable housing development. These programs in turn are offered to developers and home builders to create an incentive for the construction of low cost housing.
Supporting Affordable Housing
Last year the Federal Home Loan Bank of Dallas awarded $7.8 million in grants to 27 affordable housing projects. The grants will help create 1,499 new or rehabilitated housing units. sets aside 10 percent of their annual net income to provide funding for affordable housing. Their programs include help first-time homebuyers, help veterans purchase or rehabilitate a home, and provide much needed resources to help developers create affordable housing for very low- to moderate- income families. Since the Affordable Housing Program’s inception in 1990, FHLB Dallas has awarded more than $254 million in AHP and AHP set-aside programs. HELP and SNAP have assisted more than 47,000 households.