Community Lending Program Enhancements
January 2007 |
The New Year has brought with it exciting enhancements at the Home Loan Bank of New York (”HLB”). The HLB has made significant pricing changes to Community Lending Program advances and has restructured the lending parameters of the program to make it more advantageous for our members.
Given the shape of the yield curve and the resulting pressure on members’ net interest margins, the HLB has made significant enhancements to the Community Lending Program (“CLP”) to help ease the squeeze.
In the past, CLP rates were priced 8 bps above HLB cost of funds to factor in administrative costs. Now members can borrow at the HLB’s actual cost of funds! The chart highlights this considerable price advantage, comparing the regular Fixed-Rate Advance to the CLP Fixed-Rate Advance. This added benefit can help our members be more competitive in their markets as well as assist with their asset/liability management by match funding or pool funding assets.
Furthermore, last March the HLB introduced CLP Program-Specific Lending, allowing members to apply for a larger commitment to finance a targeted lending program (housing or commercial/community development). At that time, a $20 million commitment limit ($10 million for housing and a $10 million for community development) was set on Program-Specific Lending. In an effort to add more value for our members, the HLB has expanded the commitment limit on CLP advances. Now members can submit Community Investment Program (”CIP”), Rural Development Advance (”RDA”), and Urban Development Advance (”UDA”) requests up to the greater of 5% of their advances outstanding or $100 million. The new structure applies to both Project-Specific and Program-Specific commitment requests combined. With Program-Specific lending, all loans originated within the parameters of the approved lending program may be submitted for funding. Loans that were originated prior to the submission of a Program-Specific application are eligible for funding as long as the loans were originated within three months of the requested date.
The CLP program provides a continuous source of low-priced funds to help you enhance profitability, improve community public relations, and enhance CRA performance. Applications, CLP program specifications, and rates can be found on our website at www.fhlbny.com/community. For assistance with choosing the right advance structure for your housing or economic development endeavors, contact a Calling Officer at (212) 441-6700. If you have any questions about these recent enhancements or how the CLP program can benefit you, contact the Community Lending Department at (212) 441-6851.
CLP Program Benefits:
- Applicable to a wide range of housing and community/economic development activities
- Flexible funding structures at favorable rates and terms
- Ability to match terms of the end loan to your customer to hedge interest rate risk
- Reduced financing costs
- Access to lower cost of funds at favorable terms for end loan recipient
- Enhanced CRA performance
- Improved community relations and recognition for community development activities
Housing and Community Lending Corner
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Member lender Metuchen Savings Bank, in partnership with the Thrift Institution Community Investment Corporation, a loan consortium of the NJ League of Community Bankers, requested a $448,000 HLB CIP commitment to refinance New Community Corporation’s...more
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