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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. Indirectly, these programs have assisted thousands of households nationwide with their home financing needs.

Supporting Community Development

Federal Banks also enter the market and directly help their member institutions through their Homeownership Set-aside Program (HSP) which provides down payment, closing cost and repair assistance to first-time homebuyers earning at or below 80% of the Area Median Income for households purchasing or constructing homes in Colorado, Kansas, Nebraska and Oklahoma. HSP is provided to households as a forgivable grant with a five-year retention period. This program is a partnership with FHLBank members. Members work with qualified homebuyers, submit documents to FHLBank, provide the grant funds at closing and request reimbursement of the funds after closing. Community Investment Program advances (or loans) that allow members to fund affordable housing while maintaining profit margins and minimizing risk.

Supporting Affordable Housing

Last year the Federal Home Loan Bank of Topeka approved more than $7 million in affordable housing program grants throughout Colorado, Kansas, Nebraska and Oklahoma in 2016. This year program offers a maximum subsidy per project for 2017 is $750,000. The application period opens on May 15, 2017 and must be submitted by midnight CST, June 30, 2017. FHLBank will announce approved projects no later than December 29, 2017. If awarded, the grant will provide financing for owner-occupied and rental housing to address the needs of very low-, low-, and moderate income households.