Housing Finance

Improving the Federal Home Loan Bank System's Affordable Housing Program Gao ID: RCED-95-82 June 9, 1995

Decent and affordable housing for every American family has been a goal of national housing policy since 1949. A shortage of affordable housing has prompted Congress to expand the capital available to finance such housing. The Financial Institutions Reform, Recovery, and Enforcement Act of 1989 required that the Federal Home Loan Bank System establish an Affordable Housing Program to help finance housing for households with very low, low, and moderate incomes and directed GAO to evaluate this program. This report examines (1) how program funds have been used to support affordable housing initiatives, (2) how the program has been run, and (3) whether opportunities exist to improve the program as a source of housing finance.

GAO found that: (1) the FHL Bank System provided nearly $234 million for AHP through 1993; (2) these funds helped leverage the additional $3 billion from other sources to finance over 1,600 affordable housing projects; (3) AHP has encouraged more lenders and sponsors to finance and develop affordable housing in urban and rural communities; (4) FHL Banks and the Finance Board have improved their administration of AHP, documentation of critical decisions on how they select and fund projects, and compliance with AHP requirements; (5) the Finance Board's examiners continue to cite several banks for deficiencies in selecting projects and in calculating the amount of their AHP subsidies; (6) many FHL Banks currently do not have adequate procedures for documenting and verifying that the projects' beneficiaries are eligible for benefits and for ensuring that projects comply with any unique commitments made in the original applications; and (7) the Finance Board's lack of a quorum has delayed its action on compliance issues in cases in which existing regulations are unclear.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

Director: Team: Phone:


The Justia Government Accountability Office site republishes public reports retrieved from the U.S. GAO These reports should not be considered official, and do not necessarily reflect the views of Justia.