CLP Advances — FHLBNY’s Lowest Priced Path to Community Growth

Most of our member-lenders know the core of the FHLBNY’s mission is advancing housing opportunity and local community development. However, they may not know our Community Lending Program (CLP) features the lowest priced source of FHLBNY funding to support home financing, housing, and commercial and economic development activities.

As can be seen in the below chart, in many cases CLP advances are 24 basis points lower than both the FHLBNY’s Fixed-Rate and Amortizing Advances, depending on maturity.

CLP Rates Compared to the Fixed-Rate and Amortizing Advance
Indications provided are as of 6/14/16
Term Fixed CLP Fixed Term Amortizing CLP Amortizing
1 Yr 1.00% 0.77% 5/5 Yr 1.34% 1.11%
3 Yr 1.25% 1.02% 7/7 Yr 1.53% 1.30%
5 Yr 1.58% 1.36% 10/10 Yr 1.84% 1.61%
7 Yr 1.85% 1.62% 15/15 Yr 2.28% 2.04%
10 Yr 2.32% 2.09% 20/20 Yr 2.63% 2.39%

These discounted rates offer a substantial price advantage to members, helping them to preserve or enhance their net interest margins and enabling them to become more competitive within their markets. Yet, arguably the most significant benefit of using a CLP advance is the opportunity it presents to help members manage asset/liability risk or pool fund assets. CLP advances offer longer-term maturities so members can match-fund the duration and structure of the end loan better, locking in a spread for the life of the loan to mitigate interest rate risk.

Regardless of the advance structure you choose, CLP advances provide a source of funding for projects that are located in low- and moderate-income neighborhoods, or benefit families in these areas. The CLP is comprised of three types of advances: Community Investment Program (CIP) Advances, Rural Development Advances (RDA), and Urban Development Advances (UDA). The CLP Quick Reference Guide outlines the individual specifications for these advances so you can see how your loan portfolio compares.

CIP Advances may be used for the acquisition, construction, rehabilitation, and financing of housing for families that do not exceed 115% of the area median income. Originations of individual mortgage loans for families at this income level also qualify for CIP financing. RDA and UDA Advances are designed to finance the economic development needs of members’ communities, including commercial, small business, social service, and public facility projects and activities. While the type of activity will vary based upon the needs of the community, the individuals benefiting must have median incomes of no more than 115% (RDA) or 100% (UDA) of the area median income, or be located in neighborhoods sharing these respective income targets.

Successful RDA and UDA projects have included financing for grocery stores, daycare centers, healthcare facilities, manufacturing plants, retail outlets, and small business loans. Small businesses can benefit from RDA or UDA advances with funding for the purchase of new equipment and/or expansion to new locations. In addition, it is important for members to keep in mind that any property or project located within a national- or state-designated enterprise or empowerment zone can qualify for a UDA/RDA advance.

The Disaster Relief Funding Program is also available under the CLP, offering financial assistance to communities affected by natural disasters and severe weather, in accordance with FEMA declarations.

CIP Letters of Credit (L/Cs) are also available at a discounted rate below regular L/C prices, to serve as credit enhancements for a variety of transactions, such as (but not limited to) the promotion of home financing, housing activities, or financing of commercial and economic development projects.

CLP applications are available here. Applications can be submitted on a project-specific or program-specific basis, which allows you to fund multiple projects with one application. A total limit of the greater of $100 million or 5% of outstanding advances (as of 12/31 of the previous year) per member is in effect. To see how CLP advances can potentially help increase your profitability, enhance CRA performance, and improve your community visibility and public relations, contact your Calling Officer at (212) 441-6700 or the Community Lending department at (212) 441-6850.

  • Benefits of CLP Advances:
  • Flexible funding structures at favorable rates and terms
  • Access to low-cost funds at favorable terms for the end loan recipient
  • Ability to match terms of the end loan to the customer to help hedge interest rate risk
  • Enhance CRA performance
  • Simple application process — members can apply for a project or program-specific commitment
  • Responsive commitment process — the member controls the funding
  • Upfront transactions — no hidden penalties
  • Established program since 1989 with $9.3 billion committed and $8.2 billion funded (as of 12/31/2015)