The Affordable Housing Program Provides Flexible Funding to Support Shareholders' Business Development Goals
March 2013 - Since 1990, FHLBank Atlanta has awarded more than $424 million in real estate equity through its Affordable Housing Program (AHP) Competitive. Those funds have helped finance more than 70,000 affordable units of rental and ownership housing and facilitated $5.9 billion of housing development in shareholders’ communities – a more than 1:14 ratio of AHP equity to total development financing. At the same time, AHP funds help drive shareholders’ business growth and accomplish a variety of objectives such as reducing mortgage principal, providing gap financing, and assisting homebuyers with down payments and closing costs.
Paul Kennedy, senior vice president and commercial loan officer at Carolina Bank, says AHP has helped build the institution’s lending business, particularly with construction loans.
“My developers understand that one of the potential funding sources to make their deals work are AHP loans or grants,” Kennedy says. “When I am out looking for new or existing developers, being in a position to say our bank is a member of FHLBank Atlanta and can offer AHP funding gives us an advantage over our competitors.”
For Carolina Bank and shareholders like them, FHLBank Atlanta’s AHP Competitive delivers timely gap funds that help shareholders manage transactional credit risk and enhance their extension of credit to ready and viable affordable housing finance opportunities. Also, interest-rate subsidies or principal reductions obtained through the AHP can substantially reduce a shareholder’s credit risk and increase their ability to initiate programs that otherwise would not meet cash flow projections and other underwriting.
For developers, AHP funding helps close gaps in budgets, establishes seed capital that can be leveraged with other funding sources, and creates financially feasible development plans that support affordable rental and home purchase units. Wayne Copeland, CFO of Miracle Hill Ministries, says he heard about AHP during a presentation at a conference for rescue missions. The presenter explained how AHP funding could assist with affordable housing development. Copeland followed up after the conference to learn more and decided AHP would be a good fit for two projects his ministry planned to sponsor. Copeland formed a partnership with a developer at the conference and both found an FHLBank member bank to apply through.
“We have used AHP funds for two renovations, an older building and a newer building needing repairs,” Copeland says. “The older building is about 100 years old and now has an elevator. These two projects would not have been possible without AHP funds.”
To learn about AHP and potential opportunities for your financial institution, call 1.800.536.9650 option 3, option 1, option 3. Applications for the 2013 offering will be available beginning March 11, 2013, with a submission deadline of April 8, 2013.
© 2013 Federal Home Loan Bank of Atlanta, All Rights Reserved. 1475 Peachtree Street NE, Atlanta, GA 30309
The Federal Home Loan Bank of Atlanta is not a registered investment advisor. Nothing herein is an offer to sell or a solicitation of an offer to buy any securities or derivative products. You should consult your own legal, financial and accounting advisors before entering into any transaction.