FHLBank Overview

FHLBanks and their members are the largest source of residential mortgage and community development credit in the United States.

A Regional Cooperative of Twelve FHLBanks:

There are twelve Federal Home Loan Banks (FHLBanks), each with its own president and board of directors, located in different regions of the country, with twelve distinct sets of customers, all with differing kinds of demand for their products, services and expertise. The FHLBanks' cooperative structure is ideal for serving the System's 8,100 member lenders. Each regional FHLBank manages and is responsive to its customer relationships, while the twelve FHLBanks use their combined size and strength to obtain the necessary funding at the lowest possible cost.

How FHLBanks Help Communities:

The FHLBanks provide billions of dollars of primary liquidity to approximately 80% of the nation's financial institutions. By providing this assured liquidity to its members, the FHLBank System allows member institutions to remain active lenders, in all economic cycles, to help their local economies grow.

Mission:

"The mission of the Federal Home Loan Banks is to provide cost-effective funding to members for use in housing, community, and economic development; to provide regional affordable housing programs, which create housing opportunities for low- and moderate-income families; to support housing finance through advances and mortgage programs; and to serve as a reliable source of liquidity for its membership."

"FHLBank Advances. Advance lending is the FHLBanks' main business line. It currently represents about two-thirds of all the FHLBanks assets. These loans, known as advances, are well-collateralized loans used by members to support mortgage lending, community investment and other credit needs of their customers.”

"Mortgage Program. An innovative component of the FHLBanks member services is their acquired mortgage assets (AMA) or mortgage programs. These FHLBank mortgage programs serve as an alternative to the secondary mortgage market. The programs split the associated risks according to expertise of the member lenders and Home Loan Banks. Member lenders keep the credit risk and maintain the customer relationship, while the FHLBanks manage the interest rate risk. Unbundling these risks allows the member and the FHLBanks to manage what each knows best.”

“Specific FHLBank Programs That Help Low-Income Housing and Community Development: The FHLBanks deliver on their commitment to promote community development through two of the nation's most successful housing programs: the Affordable Housing Program (AHP) and the Community Investment Program (CIP).”

"Since its inception in 1989, AHP has provided over $2.9 billion dollars in grants to help create 575,000 housing units.”

"$47 billion in CIP-funded loans, also since 1989, have financed nearly 600,000 housing units and thousands of economic development projects.”

“How FHLBanks Raise Money: FHLBanks issue debt to institutional investors through the Office of Finance. These products are rated Aaa/AAA by Moody's and Standard & Poor's respectively. FHLBank debt is the joint and several liability of all the FHLBanks.”

Each year, 30 percent of FHLBank net earnings are paid into two separate programs. Ten percent of gross earnings go to the Affordable Housing Program (AHP) and 20 percent of the net income is paid into REFCORP. These statutory obligations are tantamount to a 30 percent federal levy on FHLBank income.