The Home Loan banks have long billed themselves as among the largest providers of financing for affordable housing but the system provides only a small portion of its overall funding toward the construction of affordable housing projects, typically through the Low-Income Housing Tax Credit. Nonprofits have criticized the competitive affordable housing program as too complicated and time-consuming for the small amount of funding. 

A key finding of the FHFA's 100-year review of the Federal Home Loan Bank System was that the banks should increase their support for housing and community development. Many commenters during the review said the affordable house program, or AHP, application process is overly complicated.

"Stakeholders encouraged FHFA to improve the efficiency of the application processes, which they stated require significant commitments of time and effort for a relatively small amount of AHP subsidy relative to other project funding sources," FHFA said in its request for input.  

Ryan Donovan, president and CEO of the Council of Federal Home Loan Banks, a trade group for the system, said the banks are supportive of "an easier path" for accessing AHP funding.

"One of the biggest challenges facing community and affordable housing groups desperately seeking funding is how best to navigate the complexity of the AHP grant program application process," said Donovan. "We hope this is the beginning of a process to meaningfully streamline AHP regulations to enhance access use and, importantly, the impact of the program."

Each of the 11 regional Home Loan banks are required by statute to give 10% of earnings to affordable housing, which amounted to roughly $350 million last year. Many experts have been prodding the banks to raise their funding for AHP to 20%, which some have done voluntarily. 

In its request for input, the FHFA provided a series of questions about the AHP, including whether some documentation requirements are necessary and how the process could be more efficient. FHFA also is looking at how the AHP process compares to other providers of gap funding, which is typically the final piece of financing bridging the gap between loans and a construction project's total costs. FHFA also is asking what role consultants play in applying for AHP funds. 

The AHP subsidies typically take the form of grants or lower interest rates for the purchase, construction or rehabilitation of rental housing in which at least 20% of the units will be occupied by households with incomes at or below 50% of the area median income. The FHFA is soliciting feedback solely on the system's competitive application programs for the development of multifamily rental housing.

Each Home Loan bank has discretion over the application process to address the affordable housing needs in its district.

FHFA is required by statute to prioritize projects that use federal government properties or that  are sponsored by a nonprofit organization or state government. It also must ensure that a majority of the assistance is ultimately received by low- and moderate-income households.

The Home Loan banks are a little-known government-sponsored enterprise created in 1932 to support mortgage lending after the Great Depression. The banks have been criticized for receiving billions in subsidies and generating sizable profits for its member banks while providing far less support for its mission of affordable housing. 

Commenters have until August 19 to provide feedback. Among the questions provided, FHFA said it wants to know the single most important change to improve the AHP application process.