12 U.S.C. § 1430 — Advances to members

(a)(1) Each Federal Home Loan Bank^* may make a secured advance to a member^*. The collateral must, in the Bank's judgment, fully secure the advance obtained under this section or section 1431(g) of this title. (2) A long-term advance may be made only to provide funds for residential housing finance, or to provide funds to a community financial institution^* for small businesses, small farms, small agri-businesses, and community development activities. (3) When a Bank^* originates or renews a loan or advance, it must obtain and maintain a security interest in collateral that fits at least one of these categories: (A) fully disbursed whole first mortgages on improved residential property that are not more than 90 days delinquent, or securities representing a whole interest in those mortgages; (B) securities issued, insured, or guaranteed by the United States Government or one of its agencies, including mortgage-backed securities issued or guaranteed by the Federal Home Loan Mortgage Corporation, the Federal National Mortgage Corporation, and the Government National Mortgage Association; (C) cash or deposits of a Federal Home Loan Bank; (D) other real-estate-related collateral acceptable to the Bank if it has a readily ascertainable value and the Bank can perfect its interest in it; or (E), for a community financial institution, secured loans for small business, agriculture, or community development activities, or securities representing a whole interest in those secured loans. (4) These collateral categories do not limit a Bank's ability to take steps it considers necessary to protect its security position for outstanding advances, including requiring deposits of additional collateral, even if that additional collateral would not be eligible to originate an advance. If an advance existing on August 9, 1989, matures and the member lacks enough eligible collateral to fully secure a renewal, the Bank may renew the advance with collateral the Bank considers appropriate. A member whose advance is secured by insufficient eligible collateral must promptly and prudently reduce its outstanding advances according to a schedule set by the Federal Home Loan Bank. (5) The Director^* may review the collateral standards for the classes in paragraph (3)(D) and (E). If necessary for safety and soundness, the Director may require higher standards for any or all of those classes. (6) For this subsection, “small business,” “agriculture,” “small farm,” “small agri-business,” and “community development activities” have the meanings given to them by the Director's regulations. This section does not define those terms itself. (b) For this section, each Home Loan Bank may make, or cause or require others to make, appraisals and other investigations that it considers necessary. A home mortgage^* that otherwise qualifies as collateral for an advance may not be accepted if a director, officer, employee, attorney, or agent of the Home Loan Bank or borrowing institution is personally liable on the mortgage, unless the Director specifically approves accepting it. (c) An advance must be made on the borrowing member's note or obligation, secured as this section provides, and bearing the interest rate the Federal Home Loan Bank approves or determines. The Federal Home Loan Bank also has a lien on and must hold the member's stock as additional collateral for all of the member's debt to the Bank. (d) The institution applying for an advance must make a primary and unconditional promise to pay all advances, interest, and unpaid costs and expenses according to the terms of the advances, in a form meeting the Bank's requirements. The Bank must reserve the right to require the borrowing institution, whenever the Bank considers it necessary for protection, to deposit additional collateral or substitute security. The borrowing institution must assign additional or substituted security when and as required. A Federal Home Loan Bank may sell an advance made under this chapter to another Federal Home Loan Bank, with or without recourse, or allow that Bank to participate in the advance. Another Federal Home Loan Bank may buy the advance or accept a participation, together with an appropriate assignment of the security. (e) Despite any other law, a security interest granted to a Federal Home Loan Bank by a member or an affiliate^* of a member has priority over the claims and rights of every party, including a receiver, conservator, trustee, or similar lien creditor, except claims and rights that would have priority under otherwise applicable law and claims and rights held by actual bona fide purchasers for value or actual secured parties whose actual perfected security interests secure them. (g)(1) Within two years after August 9, 1989, the Director must adopt regulations establishing community-investment or service standards that members must meet to keep continued access to long-term advances. (2) Those regulations must consider factors such as the member's performance under the Community Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) and the member's record of lending to first-time homebuyers. (h)(1) Subject to paragraph (2), the Federal Home Loan Banks may, at the request of the Director of the Office of Thrift Supervision, make short-term liquidity advances to a savings association^* that is solvent but presents a supervisory concern because of poor financial condition, and that has reasonable and demonstrable prospects of returning to satisfactory financial condition. (2) A loan under paragraph (1) must meet all applicable collateral requirements, including subsection (a). Its interest rate may be no less favorable than the rate for similar short-term liquidity advances to savings associations that do not present that supervisory concern. (i)(1) Each Bank must establish a program to provide members funding for community-oriented mortgage lending. Each Bank must designate a community investment officer to carry out the Banks' community lending and affordable housing advance programs under this subsection and subsection (j), and to provide technical assistance and outreach promoting those programs. Advances under this program must be priced at the cost of consolidated Federal Home Loan Bank obligations with comparable maturities, taking reasonable administrative costs into account. (2) “Community-oriented mortgage lending” means providing loans to finance: (A) home purchases by families whose income is no more than 115 percent of the area's median income; (B) the purchase or rehabilitation of housing for families whose income is no more than 115 percent of the area's median income; (C) commercial and economic development activities that benefit low- and moderate-income families or are located in low- and moderate-income neighborhoods; or (D) projects combining purposes in (A) through (C). (j)(1) Under regulations issued by the Director, each Bank must establish an Affordable Housing Program to subsidize the interest rate on advances to members that lend for long-term, low- and moderate-income, owner-occupied housing and affordable rental housing at subsidized interest rates. (2) The Board's regulations must allow members to use subsidized advances to: (A) finance homeownership for families with incomes at or below 80 percent of the area's median income; (B) finance the purchase, construction, or rehabilitation of rental housing where at least 20 percent of the units will, for the remaining useful life^* of the housing or the mortgage term, be occupied by and affordable for very low-income households; or (C) during the two-year period beginning July 30, 2008, use the percentage that the Director sets by regulation of subsidized advances set aside for homeownership under (A) to refinance loans secured by a first mortgage on a family's primary residence when the family's income is at or below 80 percent of the area's median income. (3) When using advances under paragraph (1), each Bank member must give priority to qualified projects such as: (A) buying homes for families whose income is 80 percent or less of the area's median income; (B) buying or rehabilitating housing owned or held by the United States Government or one of its agencies or instrumentalities; and (C) buying or rehabilitating housing sponsored by a nonprofit organization, a State^* or a State political subdivision, a local housing authority, or a State housing finance agency^*. (4) Each member receiving advances under this program must report every year to the Bank that made the advances about how it used them. (5) Each Bank must contribute every year the following percentage of its annual net earnings to support subsidized advances through the Affordable Housing Program: (A) in 1990, 1991, 1992, and 1993, 5 percent of the preceding year's net income, or prorated sums needed to ensure that all Banks together contribute at least $50,000,000 for each year; (B) in 1994, 6 percent of the preceding year's net income, or a prorated sum needed to ensure that all Banks together contribute at least $75,000,000 for that year; and (C) in 1995 and later years, 10 percent of the preceding year's net income, or prorated sums needed to ensure that all Banks together contribute at least $100,000,000 for each year. (6)(A) If a Bank finds that the required payments are contributing to its financial instability, it may apply to the Director for a temporary suspension of the payments. (B) In deciding whether a Bank is financially unstable, the Director must consider factors such as whether the Bank's earnings are severely depressed, whether its membership capital has substantially declined, and whether its outstanding advances have substantially decreased. (C) The Director must review the application and supporting financial data and issue a written decision approving or disapproving it. The decision must include specific findings and reasons. (D) If the Director grants a suspension, the Director must state how long it will last and must continue monitoring the Bank's financial condition during it. (E) The Director may not suspend payments if the Bank's reduced earnings result from a change in the terms of advances to members that market conditions do not justify, inordinate operating and administrative expenses, or mismanagement. (F) The Director must notify the House Committee on Banking, Finance and Urban Affairs and the Senate Committee on Banking, Housing, and Urban Affairs at least 60 days before the suspension takes effect. The suspension takes effect unless Congress enacts a joint resolution disapproving it. (7) If a Bank does not use or commit the full amount provided under this subsection in a year, it must deposit 90 percent of the amount not used or committed that year into an Affordable Housing Reserve Fund administered by the Director. The Bank keeps the other 10 percent, but it should fully use or commit that amount during the following year. Any part still remaining must be deposited in the Affordable Housing Reserve Fund. Under the Director's regulations, money from that Reserve Fund may be made available to any Bank for additional affordable-housing needs in its district under this section. (8) For this paragraph, a Federal Home Loan Bank's net earnings are calculated after subtracting any payment required under section 1441 or 1441b of this title, but before declaring any dividend under section 1436 of this title. (9) The Director must issue regulations implementing this subsection. At a minimum, the regulations must: (A) identify activities eligible for subsidized advances under the program; (B) identify priorities for using those advances; (C) ensure that advances are used only to assist projects with adequate long-term monitoring to guarantee compliance with this subsection's affordability standards and other requirements; (D) ensure that most of the assistance under this subsection ultimately reaches low- and moderate-income households; (E) ensure that Banks' subsidies to member institutions are passed on to the ultimate borrower; (F) establish uniform standards for the program's subsidized advances and for member institutions' subsidized lending supported by those advances, including maximum subsidy and risk limits for different loan categories under this subsection; and (G) coordinate activities under this subsection, as much as possible, with other Federal or federally subsidized affordable-housing activities. (10) Nothing in this subsection or subsection (i) prevents a Bank from establishing additional community-investment cash-advance programs or contributing additional amounts to the Affordable Housing Reserve Fund. (11) Each Bank must appoint an Advisory Council of 7 to 15 people from community and nonprofit organizations actively involved in providing or promoting low- and moderate-income housing in the Bank's district. Each Advisory Council must meet quarterly with representatives of the Bank's board of directors. It advises the Bank about low- and moderate-income housing programs and needs in the district and about how advances are used for those purposes. At least once a year, each Advisory Council must submit to the Director its analysis of the low-income housing activity of the Bank that appointed it. (12)(A) The Director must monitor and report every year to Congress and to each Bank's Advisory Council on the Banks' support for low-income housing and community development and on how advances are used for those purposes. (B) The report required by this paragraph must include the analyses that the Advisory Councils submit under paragraph (11). (C) Every year, the Director must report to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services on the collateral pledged to the Banks, including an analysis of the collateral by type and by Bank district. (D) The Director must submit the reports under (A) and (C) to those Senate and House committees no later than 180 days after July 30, 2008. (13) For this subsection: (A) “Low- or moderate-income household” means a household with income at or below 80 percent of the area's median. (B) “Very low-income household” means a household with income at or below 50 percent of the area's median. (C) “Low- or moderate-income neighborhood” means a neighborhood where at least 51 percent of households are low- or moderate-income households. (D) For paragraph (2)(B), “affordable for very-low-income households” means that rent charged to tenants for units available for low-income families may not exceed 30 percent of the adjusted income of a family whose income equals 50 percent of the area's income, as determined by the Secretary of Housing and Urban Development, with an adjustment for family size. (k)(1) Each Federal Home Loan Bank must provide the Director, in the form the Director determines, census-tract-level data about mortgages purchased, if any. The data must include: (A) data consistent with data reported under section 4543 of this title; (B) data elements required to be reported under the Home Mortgage Disclosure Act of 1975 (12 U.S.C. 2801 et seq.); and (C) any other data elements the Director considers appropriate. (2)(A) The Director must make the data provided under paragraph (1) available to the public, in a form useful to the public, including electronically accessible forms, to the extent practicable. (B) Despite (A), the Director may not give public access to or disclose information required under this subsection if the Director determines it is proprietary or would provide personally identifiable information and is not otherwise publicly accessible in another form, unless the Director determines that making the information available is in the public interest.