[Federal Register Volume 60, Number 211 (Wednesday, November 1, 1995)]
[Proposed Rules]
[Pages 55487-55491]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-27023]



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 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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  Federal Register / Vol. 60, No. 211 / Wednesday, November 1, 1995 / 
Proposed Rules  

[[Page 55487]]


FEDERAL HOUSING FINANCE BOARD

12 CFR Part 960

[No. 95-37]


Amendment of Affordable Housing Program Regulation; Affordable 
Housing Program Application Requirements

AGENCY: Federal Housing Finance Board.

ACTION: Proposed rule.

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SUMMARY: The Federal Housing Finance Board (Board) is proposing to 
amend its regulation governing the Affordable Housing Program (AHP) to 
provide the Federal Home Loan Banks (Banks) with the authority to limit 
the maximum amount of AHP subsidy that may be requested for a given AHP 
funding period in the following ways: a uniform limit per member; a 
limit per project application; a limit per project unit; or a limit per 
amount of AHP direct subsidy per project application. A Bank would have 
the authority to establish any other subsidy limit or substantive AHP 
application requirement not specifically provided for in the AHP 
regulation, only if such subsidy limit or substantive AHP application 
requirement has received the prior approval of the Board. A Bank would 
have to consult with its Advisory Council in establishing its subsidy 
limits or substantive AHP application requirements. Any subsidy limit 
or AHP application requirement established by a Bank would have to 
apply equally to all members.
    The Board requests comments on this proposal. In addition, the 
Board requests comments on whether the AHP regulation also should be 
amended to authorize the Banks in their discretion to: Establish AHP 
subsidy limits based on the level of a member's mortgage-related assets 
or its use of Bank credit products; establish other specified types of 
AHP subsidy limits that would promote AHP goals; limit or prohibit AHP 
applications from out-of-district projects; or require involvement by 
members in an AHP project as a threshold criterion in order to be 
considered for scoring and approval of AHP funding.

DATES: Comments on this proposed rule must be received in writing on or 
before December 18, 1995.

ADDRESSES: Send comments to: Elaine L. Baker, Executive Secretary, 
Federal Housing Finance Board, 1777 F Street, N.W., Washington, DC 
20006. Comments will be available for public inspection at this 
address.

FOR FURTHER INFORMATION CONTACT: Diane E. Dorius, Deputy Director, 
Community Investment Program & Policy Division, Office of Housing 
Finance, (202) 408-2576; Sharon B. Like, Attorney-Adviser, Office of 
General Counsel, (202) 408-2930, Federal Housing Finance Board, 1777 F 
Street, N.W., Washington, DC 20006.

SUPPLEMENTARY INFORMATION:

I. Statutory and Regulatory Background

A. AHP Statutory and Regulatory Requirements

    Section 10(j)(1) of the Federal Home Loan Bank Act (Bank Act) 
requires each Bank to establish a program to subsidize the interest 
rate on advances to members engaged in lending for long term, low- and 
moderate-income, owner-occupied and affordable rental housing at 
subsidized interest rates. See 12 U.S.C. 1430(j)(1). While requiring 
the Banks to make subsidized advances to their members, section 10(j) 
of the Bank Act is silent as to whether a Bank may impose limits on the 
amount of AHP subsidy a member may obtain. The Board is required to 
promulgate regulations governing the AHP. See id. sec. 1430(j)(9); 12 
CFR part 960.
    Under the Bank Act and the Board's AHP regulation, each Bank must 
make a specified annual contribution to fund its AHP. See 12 U.S.C. 
1430(j)(5); 12 CFR 960.10. While the Bank Act does not specifically 
address the method by which the Banks' required annual contribution to 
the AHP is to be allocated among potential recipients, the AHP 
regulation establishes threshold criteria that applications must 
satisfy and a competitive application scoring process to be used to 
determine the distribution of AHP funds. See 12 CFR 960.5.
    Under the AHP regulation, during each calendar year, each Bank 
accepts applications for funds from its members by specific application 
due dates during two of four quarterly funding periods. See id. 
Sec. 960.4(a). Each Bank must notify its members of the approximate 
amount of annual AHP funds available and the approximate amount to be 
offered in each funding period. See id. Sec. 960.4(b). Applications 
must contain detailed information described in the AHP regulation. See 
id. Sec. 960.4(c). AHP funds are awarded to the applicants whose 
applications score the highest, pursuant to the scoring criteria set 
forth in the AHP regulation, among all the applications received by the 
Bank in that funding period. See id. Sec. 960.5(f). It was anticipated 
that, in this way, the best, most competitive projects would be funded 
with AHP subsidies.

B. Current Bank Policies on AHP Subsidy Limits, Member Involvement, and 
Out-of-District AHP Projects

1. Current Bank Policies
    Pursuant to prior legal advice that, absent guidance from or 
definitive action by the Board on specific policies and statutory 
interpretations, the Banks had to determine for themselves whether 
their actions were consistent with a reasonable interpretation of the 
AHP provisions of the Bank Act and AHP regulation, a number of Banks 
adopted AHP policies that impose requirements in addition to, or 
different from, the comprehensive AHP application requirements 
contained in the Board's AHP regulation.
    More specifically, several Banks unilaterally have imposed maximum 
limits on the amount of AHP subsidy that may be requested in a given 
AHP funding period, including limits applicable: per member; per 
project application; per project unit; and per amount of AHP direct 
subsidy per project application. One Bank has adopted member subsidy 
limits that are based on the level of a member's use of Bank credit 
products in the preceding year. Another Bank has established a policy 
prohibiting members from submitting AHP applications for projects 
located outside of the Bank's district.
    Yet another Bank has adopted a threshold criterion that a project 
must include member involvement in order to be scored and approved for 
AHP funding, through: financing other than through an AHP direct 
subsidy; 

[[Page 55488]]
servicing project loans at no cost to the project sponsor; making cash 
contributions of $500 per project unit; providing a minimum 100 hours 
of volunteer labor per unit provided by employees of the member; or 
contributing land or real estate owned by the member to be used in the 
project.
2. Reasons Provided for Policies
    None of the Bank policies discussed above has been acted upon by 
the Board prior to issuance of this proposed rule. All of the policies 
presumably have been adopted pursuant to determinations by the Banks 
that these policies were consistent with a reasonable interpretation of 
the Bank Act and AHP regulation.
    One reason that has been expressed for permitting various AHP 
subsidy limits is that they encourage greater participation by members 
in the AHP. Section 10(j) does not explicitly require or encourage 
widespread member participation as a goal of the AHP. On the other 
hand, the legislative history of the AHP statutory provisions does 
indicate that Congress was aware of ``uneven use of similar special 
advance programs maintained by the [Banks] in the past and the 
reluctance of some of the [Banks] to actively encourage their member 
institutions to address critical community investment and affordable 
housing needs.'' See Conference Report accompanying Financial 
Institutions Reform, Recovery and Enforcement Act of 1989, H.R. Conf. 
Rep. No. 101-222, 101st Cong., 1st Sess. (Aug. 4, 1989) at 429. The 
principle of encouraging even administration of special advances 
programs among the Banks arguably also could be applied within each 
Bank, i.e., to encouraging the use of AHP programs by all members 
within the Bank, on a broad basis, in order to meet community 
investment and affordable housing needs.
3. Reasons for Change
    In light of the level of detail set forth in the AHP regulation, 
which includes particularized filing requirements (down to specifying 
the dates by which applications must be filed), details of the required 
contents of applications, and explicit procedures for applications 
review, see 12 CFR 960.4, 960.5, the Board is concerned that some forms 
of additional substantive AHP application requirements may tend to 
undermine the regulatory scheme. The Board would prefer that the 
regulation provide flexibility through the establishment of clear 
standards under which the Banks must operate. The Board also is mindful 
of the importance of ensuring that the AHP remain responsive to the 
unique circumstances within each Bank District, and that program 
standards not hamper responsive local administration of the AHP.
    The proposed rule would allow the Banks to establish the listed AHP 
application requirements, as well as any other subsidy limit or 
substantive AHP application requirement not specifically provided for 
in the AHP regulation, only if such other subsidy limit or substantive 
application requirement has received the prior approval of the Board. 
The Board requests comment on whether this or some other approach would 
best maintain the appropriate balance between clear regulatory 
standards and responsiveness and flexibility for the program.
    The Board wishes to emphasize that the proposed rule is meant to 
clarify the regulatory scheme and should not be construed as 
representing a retreat by the Board from its consideration of the 
decentralization of the AHP by giving the Banks greater flexibility and 
control in implementing their AHP programs.
    None of the Bank policies discussed above was addressed or noticed 
for comment in the Board's proposed AHP regulation issued in January 
1994. See 59 Fed. Reg. 1323 (Jan. 10, 1994). In order to ensure that 
full consideration is given to the consequences of the proposed rule, 
the Board is requesting comments on any provisions that should be added 
to the regulation for any currently existing Bank AHP application 
policies or any other substantive AHP application requirements a Bank 
may wish to impose that are not specifically provided for in the AHP 
regulation.

II. Analysis of the Proposed Rule

A. Notice to Members of Subsidy Limits

    Section 960.4(b)(1) of the proposed rule requires each Bank to 
notify members of the applicability of any subsidy limits or other 
application requirements established pursuant to section 960.4(b) of 
the proposed rule.

B. Per Member Limits

    Section 960.4(b)(2) of the proposed rule provides that a Bank may 
establish a uniform maximum dollar limit on the amount of AHP subsidy, 
or a uniform maximum limit on the percentage of total available AHP 
subsidy, that may be requested by a member in a given AHP funding 
period.
    Limiting the amount of subsidy that may be requested by a member 
may prevent a small number of members from receiving all of the 
subsidy, thereby encouraging participation by a greater number of 
members in the AHP. While there may be an effect on the AHP regulatory 
program goal of promoting competition if highly competitive projects 
have difficulty finding available members that have not exceeded their 
limits to submit applications for them, sufficient numbers of members 
should be available to handle applications for AHP funds. Accordingly, 
any noncompetitive effect of per member subsidy limits likely would be 
minimal in comparison to the benefit of greater member participation in 
the AHP.
    The proposed rule does not authorize a Bank to establish AHP 
subsidy limits that are based on the level of a member's mortgage-
related assets or its use of Bank credit products. See further 
discussion in III.D. below.

C. Per Project Application Direct Subsidy Limits

    Section 960.4(b)(2) of the proposed rule provides that a Bank may 
limit the maximum amount of AHP direct subsidy that may be requested 
per project application, in a given AHP funding period.
    Such a limit may promote greater member involvement in the AHP by 
encouraging more members to borrow AHP subsidized advances and, in 
turn, lend their own funds to borrowers, thereby building greater 
member affordable housing lending capacity and expertise. If members' 
own funds were at risk as a result of such a limit, members would have 
greater incentive to underwrite and monitor projects for AHP compliance 
and financial feasibility. Direct subsidies, which, in some cases, are 
passed on by members to borrowers without members putting any of their 
own funds at risk, do not promote these goals.
    A direct subsidy limit would not prevent competitive projects 
seeking direct subsidies from being funded; it merely would cause those 
projects to be funded at lower levels, with the gaps in funding made up 
from other funding sources. There may be an effect on the AHP 
regulatory program goal of promoting competition if otherwise highly 
competitive projects that need a large amount of direct subsidy have 
difficulty finding other available sources for such funding, and 
therefore remain financially unfeasible. However, any noncompetitive 
effect of direct subsidy limits may be outweighed by the benefit of 
greater member involvement in the AHP.

D. Per Project Application or Per Project Unit Limits

    Section 960.4(b)(2) of the proposed rule provides that a Bank may 
limit the 

[[Page 55489]]
maximum amount of AHP subsidy that may be requested per project 
application or per project unit, in a given AHP funding period.
    Per project application or per project unit limits may prevent a 
small number of projects from receiving all or most of the available 
AHP funds in a given funding period, thereby encouraging funding of a 
greater number of AHP projects, which also may benefit housing needs in 
more areas of the district. Such limits would not prevent competitive 
projects from being funded; they would merely cause those projects to 
be funded at lower levels, with the gaps in funding made up from other 
funding sources, thereby enabling the funding of additional AHP 
projects. Again, there may be an effect on the AHP regulatory program 
goal of promoting competition if otherwise highly competitive projects 
that need a large amount of subsidy have difficulty finding other 
available sources for funding, and therefore remain financially 
unfeasible. However, any noncompetitive effect of such limits may be 
outweighed by the benefit of funding a greater number of AHP projects 
in the district.
    Per project unit limits also conform with the goal of the 
effectiveness scoring criterion in the AHP regulation to encourage 
lower levels of AHP subsidy per unit by giving additional scoring 
points for projects with lower ratios. See 12 CFR 960.5(d)(3).
    Per project unit limits could have an impact on the AHP statutory 
and regulatory program goal of promoting funding of units for very low-
income households which often need larger subsidies to make the 
projects financially feasible. See 12 U.S.C. 1430(j)(2)(B); 12 CFR 
960.3(b), 960.5(b)(1), (2), (d)(1). However, the ability to receive 
additional scoring points under the AHP regulatory scoring criterion 
for targeting units for occupancy by very low-income households, see 12 
CFR 960.5(d)(1), the importance of encouraging efforts to find other 
available sources of funding and the goal of promoting the funding of a 
greater number of projects together may outweigh any effect on funding 
of units for very low-income households.

E. Board Waiver Authority

    Section 960.4(b)(3) of the proposed rule provides that a Bank may 
establish any other subsidy limit or substantive AHP application 
requirement not specifically provided for in sections 960.4(b) or 
960.5(a)(2) of the AHP regulation, only if such subsidy limit or 
substantive AHP application requirement has received the prior approval 
of the Board. The Board requests comments on whether such additional 
subsidy limits or substantive AHP application requirements should 
depend on whether application of the limit or requirement would 
adversely affect achievement of the purposes of the AHP provisions of 
the Bank Act, or upon a showing of good cause.

F. Subsidy Limits Applied Equally to All Members

    Section 960.4(b)(4) of the proposed rule provides that any subsidy 
limits or AHP application requirements established by a Bank pursuant 
to section 960.4(b) must be applied equally to all members. See further 
discussion in III.D. below.

G. Bank Consultation With Advisory Council

    Sections 960.4(b)(2) and (3) of the proposed rule require that a 
Bank have consulted with its Advisory Council in establishing any 
subsidy limits or other substantive AHP application requirements 
pursuant to section 960.4(b). Advisory Council members typically have 
affordable housing expertise that may be very useful to the Banks in 
determining the affordable housing needs of the Bank district and how 
any subsidy limit or other substantive AHP application requirement 
would promote those needs.

III. Related Request for Comments

A. Other Types of Subsidy Limits

    The Board requests comments on any other types of subsidy limits 
that would promote AHP goals that should be considered appropriate for 
establishment by a Bank. For example, a maximum limit on the amount of 
AHP subsidy that may be requested per sponsor arguably might be 
appropriate to encourage greater participation by sponsors in the AHP, 
increase the affordable housing development capacity of more sponsors, 
and encourage the creation of more sponsors, especially where one large 
or particularly active sponsor in a district is winning a large portion 
of the Bank's AHP funds.

B. Limiting or Prohibiting AHP Applications From Out-of-District 
Projects

    The Board requests comments on whether the Banks should have 
authority to limit or prohibit members from submitting AHP applications 
from projects located outside of the Bank's district, and the reasons 
for or against such authority.
    One reason expressed for imposing such a restriction is that the 
Bank's Advisory Council, whose members are drawn from the Bank's 
district and who are required to advise on the low- and moderate-income 
housing programs and needs of the district, do not have the familiarity 
and expertise to provide guidance on projects located outside the 
district. See 12 U.S.C. 1430(j)(11). However, it also is noted that 
Advisory Council members, while most familiar with the housing needs of 
their local communities, often are very familiar with the network of 
affordable housing providers that are active across the country and 
could advise the Banks on affordable housing issues of general 
applicability.
    Another reason given for imposing an out-of-district restriction is 
that such a restriction is warranted when there is an overwhelming 
demand for AHP funds within the district.
    In addition, it is argued that the administrative costs incurred by 
the Bank to monitor out-of-district projects for compliance with the 
AHP statutory and regulatory requirements would be significantly 
greater than those for in-district projects. However, particularly in 
Bank districts that cover large geographical areas, it is possible that 
the cost of monitoring and conducting on-site visits of out-of-district 
projects would be no greater than the cost of conducting such 
activities in-district.
    Another argument made in support of an out-of-district restriction 
is that sponsors of out-of-district projects would not be precluded 
from participating in the AHP, as they could apply for AHP funds 
through a member of another Bank.
    It also is argued that an out-of-district restriction will have 
only a limited effect on the desirability of Bank membership, since 
there are other benefits to membership besides access to the AHP.
    Another argument made is that out-of-district projects located in 
lower-cost districts may be able to compete more successfully for AHP 
funds against higher-cost projects located in the district.
    It also is noted that one or a few large multistate members have 
the ability to win a substantial portion of AHP funds for out-of-
district projects, thereby resulting in significantly less AHP funds 
for use by other members and sponsors within the district.
    The Bank Act and Board regulations provide that an eligible 
institution may only be a member of and obtain advances from one Bank, 
even though members may do business through branch offices outside that 
Bank district. 

[[Page 55490]]
See id. sec. 1424(b); 12 CFR 933.5(a). The Bank Act does not 
specifically prohibit advances for AHP or other purposes from being 
used out of district. See 12 U.S.C. 1424(b); 1430(a), (j). A Bank's 
required annual contribution to the AHP is based on a percentage of the 
Bank's net earnings in the previous year. See id. sec. 1430(j)(5). 
Those net earnings are derived, in part, from advances made to members 
that have branches outside the Bank district in which they are a 
member. Preventing access to AHP funds by a member's out-of-district 
branches would deny that member the opportunity to take advantage of a 
source of funds it was, in part, responsible for generating.
    In addition, it would preclude a member that does business outside 
the Bank district where it is a member from applying for AHP funds on 
behalf of its out-of-district customers or using AHP funds to meet its 
Community Reinvestment Act obligations in those out-of-district areas. 
It is noted that, due to recent legislative and regulatory changes, 
interstate banking is increasing throughout the country and it is 
likely that more and more Bank members will be operating across state 
lines. To access the AHP, out-of-district customers would have to seek 
out a member of the Bank in whose district their state is located.
    It also is argued that out-of-district restrictions, even if 
desirable, are not warranted at this time because the number of current 
members with out-of-district branches and the number of applications 
for out-of-district projects are minimal.
    Further, to address the situation where one large multistate member 
is winning a substantial portion of AHP funds for out-of-district 
projects, uniform limits on the amount of AHP subsidy for which each 
member may apply, such as those currently imposed by a number of Banks 
(see discussion in I.B.1. above), may have a greater likelihood of 
broadening member participation in the AHP.
    It also is noted that out-of-district restrictions may result in 
the selection of less competitive in-district projects, i.e., projects 
that would have scored lower than projects that could not be submitted 
because they are located outside the district. This could undermine the 
Board's AHP regulatory program goal of promoting competition in the AHP 
selection process such that only the best, most competitive projects 
are selected for funding. See 12 CFR 960.4, 960.5.

C. Member Involvement as Threshold Criterion

    The Board requests comments on whether the Banks should have 
authority to require certain types of member involvement in a project 
as a threshold criterion the project must satisfy in order to be 
considered for scoring and approval for AHP funding. Member involvement 
could include, for example: providing financing other than a direct 
subsidy to the project; servicing project loans at no cost to the 
sponsor of the project; contributing a minimum cash amount per unit to 
the project; providing a minimum number of hours of volunteer labor per 
project unit from its employees; or contributing land or real estate 
owned by the member to be used in the project.
    Where members' own funds and contributions are at risk, members 
would be more likely to be involved in individual AHP projects, thereby 
building member affordable housing lending capacity and expertise, and 
creating greater incentives for members to underwrite and monitor 
projects for AHP compliance and financial feasibility. In the Board's 
proposed AHP regulation issued for comment in January, 1994, the Board 
proposed including the extent of member involvement in a project as a 
separate scoring criterion, rather than as a threshold requirement that 
members must meet in order for projects even to be considered for 
scoring and approval of AHP funding. See 59 Fed. Reg. 1323, 1335, 1354 
(Jan. 10, 1994). The Board requests comments on whether the extent of 
member involvement in a project should be included as a threshold 
criterion, scoring criterion or not at all in the final AHP regulation 
and, if it should be included, how it should be implemented.

D. Limits Based on the Level of a Member's Mortgage-Related Assets or 
Its Use of Bank Credit Products

    The proposed rule does not authorize a Bank to establish AHP 
subsidy limits based on the level of a member's mortgage-related assets 
or its use of Bank credit products. The Board requests comments on 
whether the Banks should have authority to impose AHP subsidy limits 
based on the level of a member's mortgage-related assets or its use of 
Bank credit products. Commenters should address how such subsidy limits 
would advance the overall goals of the AHP, the reasons for or against 
such linkage, whether any such limits are compatible with the 
requirement in proposed section 960.4(b)(4) that subsidy limits be 
applied equally to all members, and whether any such limits are 
permissible under section 7(j) of the Bank Act, which requires the 
Banks to administer their affairs fairly and impartially and without 
discrimination in favor of or against any member borrower. See 12 
U.S.C. 1427(j).
    One reason that has been expressed for imposing such limits is that 
they would encourage broader participation by members in the AHP. 
Involving more members in the AHP could give project sponsors more 
options for financing AHP projects, and provide experience and 
education to more members that could help them develop additional 
capacity to engage in affordable housing lending.
    However, imposing limits based on levels of member mortgage-related 
assets or borrowings may not achieve this goal if members with high 
levels of mortgage-related assets or borrowings who already participate 
in the AHP would be allowed to apply for and win the additional AHP 
subsidies no longer available to those members subject to the limits. 
Uniform limits on the amount of AHP subsidy for which each member may 
apply, such as those currently imposed by a number of Banks (see 
discussion in I.B.1. above), may have a greater likelihood of 
increasing member participation in the AHP.
    Another objective expressed for imposing subsidy limits based on 
member use of Bank credit products is that they would increase the pool 
of available AHP funds by encouraging greater borrowing from the Bank 
and therefore increasing Bank earnings, from which AHP funds are 
derived. Increased AHP funds could be used by the Bank to finance more 
AHP projects, thereby benefiting more low- and moderate-income 
households and furthering the housing finance mission of the Bank 
System. See id. sec. 1422a(a)(3)(ii). The argument also is made that 
members that contribute to Bank earnings by borrowing should have 
greater access than non-borrowing members to AHP funds derived from 
such earnings.
    The Bank Act does not restrict availability of AHP subsidies to 
``borrowing'' members. Nor does it specify any correlation between the 
member's contribution to Bank earnings and its access to AHP funds. 
Bank earnings are affected by economic factors other than the amount of 
outstanding advances of members participating in the AHP. Thus, even 
non-borrowing members contribute to Bank earnings and, therefore, to 
the AHP fund. The limits also may not enlarge the AHP fund by 
increasing member borrowing because small 

[[Page 55491]]
member institutions, by virtue of their limited asset size, would be 
incapable of increasing or unwilling to increase their borrowings (due 
to the increased cost of borrowing resulting from investing in 
additional Bank stock) just to receive ``preferred treatment'' under an 
AHP subsidy limits policy.
    Another possible reason for limiting access to AHP subsidies based 
on a member's level of mortgage-related assets may be to encourage 
members to do more home financing, consistent with the provisions of 
the Bank Act that impose less burdensome advances and stock 
requirements on institutions that devote a greater percentage of their 
assets to housing finance (qualified thrift lenders). See id. sec. 
1430(e)(1), (2); 12 CFR 935.13. However, such a limit may defeat this 
goal since members with lower levels of mortgage-related assets would 
have limited access to AHP subsidies which they could use for such 
housing finance purposes.

IV. Regulatory Flexibility Act

    The proposed rule applies only to the Banks, which do not come 
within the meaning of ``small entities,'' as defined in the Regulatory 
Flexibility Act. See 5 U.S.C. 601(6). Therefore, in accordance with 5 
U.S.C. 605(b), the Board hereby certifies that this proposed rule, if 
promulgated as a final rule, will not have a significant economic 
impact on a substantial number of small entities.

List of Subjects for 12 CFR Part 960

    Banks, banking, Credit, Federal home loan banks, Housing.

    Accordingly, part 960 of title 12 of its Code of Federal 
Regulations is hereby proposed to be amended as follows:

SUBCHAPTER E--AFFORDABLE HOUSING

PART 960--AFFORDABLE HOUSING PROGRAM

    1. The authority citation for part 960 continues to read as 
follows:

    Authority: 12 U.S.C. 1422a, 1422b, 1430(j).

    2. Paragraph (b) of Sec. 960.4 is revised to read as follows:


960.4  Applications for funding.

* * * * *
    (b)(1) Each Bank shall notify its members of the approximate amount 
of annual program funds available for the District, the approximate 
amount to be offered in each funding period, and the applicability of 
any subsidy limits or other application requirements established 
pursuant to this paragraph (b). The amount of funds made available in 
each offering should be comparable.
    (2) A Bank, after consultation with its Advisory Council, may limit 
the maximum dollar amount of subsidy, or the maximum percentage of 
total available subsidy, that may be requested in a given funding 
period in the following ways:
    (i) A uniform limit per member;
    (ii) A limit per project application, including limits varying 
according to project size;
    (iii) A limit per project unit; or
    (iv) A limit on the amount of direct subsidy per project 
application.
    (3) A Bank, after consultation with its Advisory Council, may 
establish any other subsidy limit or substantive application 
requirement not specifically provided for in this paragraph (b) or 
Sec. 960.5(a)(2), only if such subsidy limit or substantive application 
requirement has received the prior approval of the Board.
    (4) Any subsidy limit or application requirement established by a 
Bank pursuant to this paragraph (b) must apply equally to all members.
* * * * *
    Dated: October 25, 1995.

    By the Federal Housing Finance Board.
Bruce A. Morrison,
Chairman.
[FR Doc. 95-27023 Filed 10-31-95; 8:45 am]
BILLING CODE 6725-01-U