Community Investment News

Spring 2013

View Print Version

Support Group Initiative Results in New Housing Opportunities
Grant to Cavalry Baptist chruch of Jamaica Congressman Gregory W. Meeks (NY-6), pictured here with FHLBNY Director Rev. Edwin C. Reed presenting an Affordable Housing Program grant to Calvary Baptist Church of Jamaica New York, kicked off the FHLBNY’s 2012 round of Affordable Housing Program funding. (photo credit: Nat Valentine)

Last October, Congressman Gregory W. Meeks (NY-6) opened the Federal Home Loan Bank of New York’s 2012 round of Affordable Housing Program grants by announcing a $550,000 grant to Calvary Baptist Church of Jamaica New York to help build 58 affordable homes in his district. The grant will help fund construction efforts on the Calvary Grandparent Residence, which will provide affordable housing for seniors who are taking on the responsibility of raising their grandchildren.

“Southeast Queens has an ever growing number of grandparents who are the primary caregivers for their grandchildren,” stated Congressman Meeks. “The Federal Home Loan Bank of New York’s award of $550,000 to assist in the construction of affordable apartments for the Calvary Grandparent Residence is a valuable contribution to ensuring that grandparents have the housing they need to nurture the grandchildren in their care. This award will go a long ways toward alleviating the pressures these families face in restrictive housing.”

The residence will provide several on-site supportive services, including parenting classes, respite care, counseling and support groups, summer programs for children, stress reduction and exercise classes. The idea for the residence came from the church’s grandparents support group, comprised mainly of community members not associated with Calvary Baptist Church.

“This is why Calvary Baptist Church is doing such a great job,” Congressman Meeks said. “This is not just for Calvary members. It’s the church reaching out to the community.”

The FHLBNY partnered with its member, New York Community Bank, to make the grant, which was part of $26.4 million in Affordable Housing Program subsidies that the Federal Home Loan Bank of New York will award as its 2012 AHP grant round. It also marks the 15th time the two organizations have partnered to award an AHP grant. The AHP has been a very active program in Congressman Meeks’ district: since 1998, six AHP grants totaling $3.5 million have been awarded in the district, helping to create or preserve more than 400 affordable homes for Queens families.

“What we have found is that by investing in projects, we provide the foundation for continued community development and growth,” said Rev. Edwin C. Reed, director of the Federal Home Loan Bank of New York, at the event. “But we do this because we believe banking and fi nance is more than about the numbers. It’s about the people.”

The Promise of Housing
Senator Marco Rubio with President Al DelliBoviSenator Marco Rubio (R-FL), pictured here with FHLBNY President Al DelliBovi, spoke to the importance of a strong middle class at the Jack Kemp Foundation’s Leadership Award Dinner. (photo credit: The Jack Kemp Foundation)

By Alfred A. DelliBovi

In December, I had the privilege of attending the Jack Kemp Foundation’s Leadership Award Dinner, which honored Senator Marco Rubio of Florida. In his remarks, Senator Rubio stated that “the path to a prosperous and growing American middle class is the combination of a vibrant economy that creates middle class jobs and people with the skills needed for these new jobs.” I believe that this path is laid out on the stable ground of a strong housing market.

The economic benefits of a strong housing market are clear. Over the past four decades, the contribution of housing to the national GDP has averaged between 17 and 19 percent, and still accounts for approximately 15 percent of GDP despite ongoing challenges facing housing. And homeownership is the greatest tool for wealth creation our nation’s families have. For much of the past 25 years, home equity has accounted for approximately one quarter of total household wealth.

We must make sure that our legislators embrace policies that support and strengthen housing, not damage it. The recommendations laid out in the Bipartisan Policy Center Housing Commission’s report speak to this need for sensible housing policy.

“For most of us, we need to look no further than our own communities to see where the answers to our challenges lie,” said Senator Rubio in his remarks. “It starts with strong and stable families. It continues with a vibrant civil society filled with people working together to improve their country, and with a thriving free enterprise economy that creates good paying jobs and can draw upon people with the skills to do those jobs.”

Housing has long been a traditional cornerstone of our economy and a key driver of economic development and job creation. But it is also the foundation of strong families and healthy communities. Studies have shown that homeownership has a significant positive effect on children’s educational success, community involvement, neighborhood stability and even homeowners’ physical and psychological health.

In his comments, Senator Rubio said that “one of the fundamental promises of America is the opportunity to make it to the middle class.” I agree with the Senator — one of nation’s greatest strengths is the understanding that, with enough hard work, we can all achieve the American Dream. A cornerstone of that dream is a home to call one’s own, and with sensible and balanced housing policies, we can ensure that America keeps its promise.


A Unified Voice for Housing
Doris Day Apartments in New YorkThe AHP has been an active program for more than two decades. In 2001, the FHLBNY and M&T Bank partnered to provide a $1.3 million grant to renovate the Doris Day Apartments in New York, New York.

On March 19, the Honorable Mel Martinez — co-chair of the Bipartisan Policy Center’s Housing Commission — appeared before the Senate’s Committee on Banking, Housing and Urban Affairs to discuss the bipartisan solutions for housing finance reform outlined in the Housing Commission’s report, Housing America’s Future: New Directions of National Policy.

“Our nation’s system of housing finance is broken,” Mr. Martinez said in his testimony. “It’s been more than four years since Fannie Mae and Freddie Mac were placed under government conservatorship, yet there is still no clear path forward. The Commission felt that there was an opportunity to fill this policy void and offer a blueprint for a new system that can support both the homeownership and rental markets of the future.”

Indeed, Housing America’s Future does offer a blueprint for a new system. The report is the result of a 16-month effort made by the Commission, which is comprised of 21 housing experts from diverse political and professional backgrounds, including Al DelliBovi, president of the Federal Home Loan Bank of New York. In preparing the report, the Commission held public forums on housing across the country, met with numerous housing providers and practitioners, consulted with housing experts and conducted several housing research projects.

“It is time for those of us committed to responsible and sustainable housing finance policies to speak in one voice,” said Mr. DelliBovi. “This report provides us with the framework we need to give our voice power.”

Housing America’s Future lays out a plan for a reformed housing finance system in which the private sector plays a far more prominent role in bearing credit risk. This belief is at the heart of the Housing Commission’s report: the current government role in the mortgage market must be decreased and the private sector role must be increased if any housing recovery is to not only be achievable, but sustainable, as well. As long as the federal government continues to play an oversized role in the mortgage market, housing cannot normalize and properly recover.

Through Fannie Mae, Freddie Mac and the Federal Housing Administration, the government supports more than 90 percent of single-family mortgages, and approximately 65 percent of mortgages for rental properties. As part of the needed rebalancing within the mortgage market, the report proposes, over a multi-year period, the winding down and ultimate elimination of Fannie Mae and Freddie Mac. As the report states, “the business model of these government-sponsored enterprises — publicly traded companies with implied government guarantees and other advantages — has failed and should not be repeated.”

The report proposes replacing Fannie and Freddie with an independent, wholly-owned, government corporation – the public guarantor. This new guarantor would not buy or sell mortgages or sell MBS; rather it would guarantee investors the timely payment of principal and interest on these securities, and would serve only as a catastrophic government guarantee. The report proposes that the government would stand in the “fourth loss” position behind three layers of private capital. Under this new model, private capital would once again be the primary source of funding in the mortgage market, a system that benefits consumers, taxpayers and the overall economy.

“I believe that, when done right, homeownership can produce powerful economic, social and civic benefits that serve the individual homeowner, the larger community and the nation,” said Mr. DelliBovi. “The report calls for a return to the sensible and responsible approach to housing that has been proven over time: solidly underwritten, fixed-rate mortgages with reasonable down payments suited to each individual borrower; loans which have the expectation to be repaid; and a system in which homeowners have a reasonable expectation for home value appreciation.”

This is the type of responsible lending our nation’s network of community banks is built on, and it is the type of lending that the members of the Federal Home Loan Bank of New York do every day. The best way to meet the needs of consumers and communities is to once again have the private sector play the lead role in the housing market, led by responsible local lenders. A durable housing finance system provides access to lenders of all types and sizes, including community banks and credit unions. These local lenders know the communities they serve, and their continued involvement in the mortgage market allows for mortgage credit to reach all communities in a responsible and localized manner. These are goals echoed in the Housing Commission’s report.

It took nearly two years to develop the detailed proposals laid out in Housing America’s Future: New Directions of National Policy, and it is clear that it was time well spent. The nation’s economy and its people cannot afford for the housing market to languish for another six years with no progress made on reforms. Mr. Martinez’s appearance in front of Congress is a step in the right direction. As policymakers continue to struggle to find an appropriate response to the challenges facing housing and look to the private sector for guidance, Housing America’s Future can serve as the blueprint for a new and better housing system.

Program Spotlight: Affordable Housing Program
Seashore Gardens, a senior living center in Galloway TownshipIn 2009, the FHLBNY and Ocean City Home Bank partnered to provide a $500,000 grant to Seashore Gardens, a senior living center in Galloway Township, New Jersey.

On February 25, the Bipartisan Policy Center’s Housing Commission issued Housing America’s Future: New Directions of National Policy, a detailed report outlining the challenges facing our nation’s housing market and providing recommendations on how to improve current national housing policy. The report noted that the Federal Home Loan Banks’ Affordable Housing Program (“AHP”) is “a working example of a federal housing policy that promotes access to private capital.”

Created by Congress in 1989, the AHP has grown to become one of the largest private sources of grant funds for affordable housing in the United States. Every year since the program’s inception, each Home Loan Bank sets aside 10 percent of its annual net income to fund the program. With funds from the AHP, Home Loan Bank members make grants to local housing organizations to benefit affordable housing initiatives in the communities they serve. The AHP allows for funds to be used in combination with other programs and funding sources, like the Low-Income Housing Tax Credit. These projects serve a wide range of neighborhood needs – many are designed for seniors, the disabled, homeless families, first-time homeowners and others with limited resources.

Since 1990, AHP grants have exceeded $4.8 billion; over the past decade, total AHP contributions have averaged approximately $200 million nationally each year. And these dollars work: more than 776,000 housing units have been built using AHP funds, including 475,000 units for very low-income residents. Additionally, through the AHP, the Federal Home Loan Bank System is the largest single funding provider to Habitat for Humanity.

At the Federal Home Loan Bank of New York, the AHP has supported 1,343 projects with more than $440 million in grants, helping to create or preserve nearly 58,000 units of affordable housing and generating an estimated $8 billion in total development costs. In 2012, the FHLBNY announced the results of two rounds of AHP funding: $33.6 million awarded in January, and an additional $26.4 million in October. In total, these two rounds of funding provided grants to help fund 94 affordable housing initiatives across the region, which will result in the creation or rehabilitation of more than 5,500 affordable homes. Additionally, nearly $1 billion in development costs are expected to be generated from the development of these initiatives, driving economic growth in communities across New York, New Jersey and beyond.

And there is more funding available in 2013. The deadline for the 2013 AHP application – which is available on the FHLBNY’s web site – is June 28, 2013. The FHLBNY has made $32 million available for the 2013 round.

AHP funds are awarded to FHLBNY members who submit applications on behalf of project sponsors who are planning to purchase, rehabilitate, or construct affordable homes or apartments. Funds are awarded through a competitive process, and can be used for the acquisition, construction or rehabilitation of either rental housing in which at least 20 percent of the project’s occupants earn 50 percent or less of the area median income; or owner-occupied housing in which households earn 80 percent or less of the area median income.

For more information regarding the Affordable Housing Program, please contact our Community Investment Department at (212) 441-6850.

A Commitment to Rebuilding Communities

FHLBNY Responds to Hurricane Sandy

As communities throughout New York and New Jersey were reeling in the aftermath of one of the most costly and catastrophic storms to ever strike the region, the FHLBNY was preparing to support its members’ efforts to help their communities pick up the pieces. In response to the extensive damage caused by Hurricane Sandy, the Home Loan Bank made $1 billion in Disaster Relief Funding available to nearly 340 community-based lenders in New York and New Jersey through its Community Lending Programs (“CLP”). This CLP commitment can be used for small business and economic development lending in FEMA-designated disaster areas, including bridge financing.

These low-cost advances are being used by the FHLBNY’s member-lenders for various financing purposes, essential to those areas that suffered the worst effects of the storm. The funds also serve to meet the short-, medium-, and long-term funding needs of the affected communities throughout New York and New Jersey. Commitments are being issued to members in $50 million increments, and can be used for loans originated within 90 days.

Home Loan Bank members have used the funding to bolster their efforts to rebuild small business and communities. To date, Flushing Savings Bank, The Westchester Bank, Crest Savings Bank, Oritani Bank, The Provident Bank, Community National Bank, Empire State Bank, Columbia Bank, Investors Bank, and Magyar Bank, have been approved for more than $530 million in Disaster Relief Funding commitments.

And already more than $330 million in advances have been drawn, financing a variety of activities including rehabilitation and restoration, bridge financing, working capital and refinancing.

But this commitment is far from exhausted, and members are encouraged to take advantage of these discounted Disaster Relief advances. Our region has been rocked by epic storms during the last two hurricane seasons, and as the lingering effects of these storms, as well as concerns for the future, remain, the FHLBNY will remain committed to partner with our members to assist their communities in the event of a natural disaster. For more information on the Disaster Relief Funding, please contact your calling officer, or the Community Investment Department at (212) 441-6850.

Eligible Uses of Funds

  • The $1 billion CLP commitment can specifically be used for qualified small businesses, and economic development lending. Some examples of eligible uses of CLP funds are:
  • For the acquisition, construction, refinancing, or restoration of branches, and small businesses.
  • Commercial/economic development.
Affordable Housing Program Success Stories

Citibank Breaks Ground on Housing Complex for story

NJHMFA Constructs Affordable Housing Facility for Low to Moderate Income Families in Camden, story

Common Ground to Provide Housing for Formerly Homeless and Low Income Adults in Brownsville, story

Astoria Federal Savings Opens Supportive Housing Complex in Crown Heights, story

If you would like to be considered for one of our success stories, please email your photos along with the title of your project.

Related Links

Latest Issues

Spring 2013
Community Investment News

Fall 2012
Community Investment News