U.S. Department of the Treasury’s CDFI Fund and Federal Housing Finance Agency Collaborate to Bolster CDFI Access to Capital

Today, the U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund) and the Federal Housing Finance Agency (FHFA) announced the establishment of a Working Group to increase capital for affordable housing lending from the Federal Home Loan Banks. The group will advance the Biden-Harris Administration’s priority of expanding the supply of affordable housing and reducing housing costs for American families and is part of a broad effort by Treasury and the FHFA to ensure that the Federal Home Loan Banks (FHLBs) live up to their housing mission. 

The CDFI Fund-FHFA Working Group will help more Community Development Financial Institutions (CDFIs) access affordable capital from FHLBs to address affordable housing needs in distressed communities not served by traditional banks and lenders. 

“The Biden-Harris Administration is focused on using every tool at its disposal to increase the supply of housing and lower costs for American families,” said U.S. Deputy Secretary of the Treasury Wally Adeyemo. “Critical to our efforts is working to ensure that the Federal Home Loan Banks fulfill their statutory mission of supporting affordable housing. Helping lenders expand their sources of financing and access capital from the Federal Home Loan Banks will help these community banks support a range of projects that can lower housing costs in communities across the country for years to come.”

“This collaboration between FHFA and the CDFI Fund will help accelerate the ‘System at 100’ reforms to ensure the Federal Home Loan Banks meet their housing and community development mission and remain a stable source of liquidity for their members,” said FHFA Director Sandra L. Thompson. “CDFIs play a key role with FHFA and our regulated entities in efforts to address the nation’s affordable housing challenges, working on the ground in their communities to deliver positive outcomes for underserved households.”

The Working Group defined initial topics and priorities for consideration and exploration in 2024-2025. Topics areas defined by the Working Group to examine are:

• New programs and approaches for increasing access to capital by non-depository CDFI members;
• Examination of property appraisal and collateral mechanisms and valuation methods; and
• Data sharing on non-depository CDFI activities and performance.

As detailed in FHFA’s FHLBank System at 100 report, it is a main priority for the FHLBanks to increase support to mission-oriented organizations. As such, CDFI Fund and FHFA have entered into a Memorandum of Understanding to share data to assist FHLBs to better serve CDFIs, allowing them to access capital necessary to meet urgent housing affordability needs. This effort aligns with U.S. Secretary of the Treasury Janet L. Yellen and U.S. Deputy Secretary of the Treasury Wally Adeyemo’s agenda to use all appropriate tools at Treasury’s disposal to expand housing supply, including through engaging with the FHLBs to increase their support of affordable housing.

Since its inception in 1994, the CDFI Fund has provided more than $8 billion through a variety of monetary award programs, $81 billion in tax credits through the New Markets Tax Credit Program and has guaranteed nearly $3 billion in bonds through the CDFI Bond Guarantee Program, all to increase the impact of CDFIs and other community development organizations in economically distressed and underserved communities. During this time, the CDFI Fund has helped build the capacity of more than 1,400 Certified CDFIs, which are in all 50 states as well as in the District of Columbia, Guam, and Puerto Rico. 

FHFA regulates Fannie Mae, Freddie Mac and the 11 FHLBs. These government-sponsored enterprises provide more than $8.4 trillion in funding for the U.S. mortgage markets and financial institutions.