FHFA Approves Rule to Assist with HOPE Refinancing Programs
Friday, October 10, 2008
The Federal Housing Finance Agency (FHFA) sent an interim final rule amending its Affordable Housing Program (AHP) regulation to the Federal Register today. According to an FHFA statement, the changes to the AHP regulation will help preserve homeownership for low- and moderate-income families. The new rule will allow the use of AHP subsidy in conjunction with the Federal Housing Administration’s (FHA) HOPE for Homeowners program, which was launched on October 1 as part of the Economic Recovery Act of 2008.
The AHP regulation requires each of the 12 Federal Home Loan Banks (FHLBanks) to contribute 10 percent of its previous year’s earnings to support member institutions that are making loans for affordable low- and moderate-income housing. The interim final rule amends the AHP regulation to allow the FHLBanks to use these funds to establish temporary mortgage refinancing programs.
The rule permits these earmarked funds to be used for two new purposes. First, they may be used to reduce the outstanding principal balance of the refinanced loan below the 90 percent value established by the HOPE for Homeowners program, making homeowners' monthly payments even more affordable. Second, they may be used to pay FHA-approved loan closing costs.
“The use of AHP set-aside funds with the HOPE for Homeowners Program will enhance the effectiveness of each program, ensure that the full range of federal assistance to homeowners is available quickly, and provide the flexibility that the FHLBanks and their members need to make the AHP refinancing program successful,” explained Edward DeMarco, a deputy director with the FHFA.
The interim final rule will become effective on the date of publication in the Federal Register. The FHFA said it will accept comments on the interim rule for 60 days after publication and will consider submitted comments in promulgating a final rule.
To view FHFA's interim final rule amending its AHP regulation, click here.
The AHP regulation requires each of the 12 Federal Home Loan Banks (FHLBanks) to contribute 10 percent of its previous year’s earnings to support member institutions that are making loans for affordable low- and moderate-income housing. The interim final rule amends the AHP regulation to allow the FHLBanks to use these funds to establish temporary mortgage refinancing programs.
The rule permits these earmarked funds to be used for two new purposes. First, they may be used to reduce the outstanding principal balance of the refinanced loan below the 90 percent value established by the HOPE for Homeowners program, making homeowners' monthly payments even more affordable. Second, they may be used to pay FHA-approved loan closing costs.
“The use of AHP set-aside funds with the HOPE for Homeowners Program will enhance the effectiveness of each program, ensure that the full range of federal assistance to homeowners is available quickly, and provide the flexibility that the FHLBanks and their members need to make the AHP refinancing program successful,” explained Edward DeMarco, a deputy director with the FHFA.
The interim final rule will become effective on the date of publication in the Federal Register. The FHFA said it will accept comments on the interim rule for 60 days after publication and will consider submitted comments in promulgating a final rule.
To view FHFA's interim final rule amending its AHP regulation, click here.
