Comments Due August 6 on Proposed FHFB Rule Changes Affecting

[Career/Pro <cpro@igc.apc.org>]

              Comments Due August 6, 1998
      to Federal Housing Finance Board on Two
   Proposed Rule Changes Affecting Brownfields

The Federal Housing Finance Board announced proposed
rule changes to Federal Home Loan Bank Standby Letters
of Credit (LOCs) and Community Investment Cash Advance
(CICA) programs, as cited in the Federal Register,
May 8, 1998 Issue, Volume 63, Number 89.  These changes
will expand the scope and usefulness of LOCs, promote
the creation of new CICA programs, and enhance long-term
credit opportunities to promote economic development.
This information is available in searchable format on
the Federal Register Online via GPO Access, at: 
http://www.access.gpo.gov/su_docs/aces/aaces002.html

The Federal Housing Finance Board (Finance Board) is
proposing to codify its existing policies on Federal
Home Loan Bank (FHLBank) LOCs into the form of
regulation, and to amend those policies to allow for
broader use.  The Finance Board is also proposing a
rule establishing a framework under which FHLBanks may
establish community investment cash advance (CICA)
programs in addition to their Affordable Housing
Programs (AHP) and Community Investment Programs (CIP).

The CIP is a program through which the FHLBank provides
advances to members to support financing for housing. 
Section 10 (j) (10) of the Bank Act authorizes FHLBanks
to establish CICA programs (in addition to the CIP and
the AHP) to support community investment. However,
FHLBanks have typically provided less long-term credit
for economic development projects than for housing; all
of the FHLBanks economic development lending has been
done under their CIP authority, rather than establishing
other CICA programs.  The proposed change is intended to
establish one set of standards governing all CICA
programs, making it easier for new CICA programs to
be created.

The intent of the second FHLBank policy change is to
eliminate some of the restrictions imposed on issuing
LOCs, making these letters available for broader use by
FHLBank members and eligible nonmember mortgagees. 
Participation in LOC transactions is currently governed
by the Finance Board Interim Policy Guidelines for
FHLBank Standby Letters of Credit; these guidelines permit
FHLBanks to issue LOCs on behalf of members to purchase
mortgage loans, secure public unit deposits, and assist
in other transactions that promote home financing,
housing activity, or members involvement in commercial
and economic development activity.  FHLBanks have been
permitted to engage in LOC transactions since 1983, when
the predecessor agency to the Finance Board, the former
Federal Home Loan Bank Board (FHLBB), first adapted LOC
policy guidelines.  However, because the finance board
retained the substance of the FHLBB guidelines, these
guidelines continued to impose upon LOCs all of the
regulatory requirements and restrictions that apply to
advances.  By changing FHLBank policy, many of these
restrictions will be removed, making LOCs much more
useful over a broader range of purposes.  Economic
development projects that would be eligible for support
through FHLBank LOCs would include commercial,
manufacturing, social service, public or community
facility, and public or private infrastructure projects.

More information is available on either of these
proposed policy changes by contacting Diane E. Dorius,
Associate Director, Program Development, Office of Policy,
(202) 408-2576; or Eric M. Raudenbush, Attorney-Advisor,
Office of General Counsel, (202) 408-4932, Federal Housing
Finance Board, 1777 F. Street NW, Washington, DC 20006.

For more information on the Brownfields Initiative via the
internet, please visit EPAs Brownfields Home Page at:
http://www.epa.gov/brownfields