Good news: If your institution is originating loans that support affordable housing and/or economic development initiatives, chances are you can receive reduced-rate funding from the Seattle Bank to support those loans.

More good news: Any qualifying loans that you’ve funded within the past 90 days may still qualify for discounted funding.¹

Even better: Accessing the funding is easy.

With just a small amount of effort to pre-qualify an asset’s eligibility for the Seattle Bank’s Community Investment Program (CIP) or Economic Development Fund (EDF), you may find that your loans are eligible for wholesale funding that is typically 20 basis points below standard rates. CIP/EDF funding is applicable to most Seattle Bank advance structures², and along with the low-cost funding advantage, you can also obtain CRA credits and enhance your visibility within your market.

Proceeds of CIP/EDF advances are typically used to support loans and investments that benefit multiple eligible purposes, including:

• Affordable housing, including manufactured homes and rental housing
• Single-family and multi-family rental and owner-occupied housing
• Low Income Housing Tax Credits
• Eligible mortgage revenue bonds and mortgage-backed securities
• Small business loans
• Roads, bridges, and other infrastructure types
• Commercial developments that promote employment

Assessing the eligibility of a loan or investment and submitting an application for funding is easier than you may think.

EDF Loan Qualification
EDF loans and investments for economic development (business, infrastructure, and commercial developments) may be used to support activities in neighborhoods with up to 100% of area median income in urban areas, and up to 115% of area median income in rural areas.

To determine if a project is eligible for an EDF loan, you can use an online tool provided by the Federal Financial Institutions Examination Council (FFIEC).

Simply enter the property’s address into the form provided. If the “Tract Median Family Income” is at or below 100% of area median in an urban area or 115% of area median income in a rural area, the project is eligible for a discounted advance.

If the project is not located in an eligible census tract, it may still be eligible for an EDF advance if:

• The advance supports a small business loan—regardless of the income level served.
• The advance supports a project that creates or sustains jobs where at least 51% of annual salaries are at or below 100% of area median income in an urban area and 115% of area median income in a rural area.
• At least 51% of the families who otherwise benefit from (other than through employment) or are provided services by the project have incomes at or below 100% of area median in an urban area and 115% of area median in a rural area.
• The project is located in a qualified area—regardless of the incomes served—such as an Alaska Native Village, Native Hawaiian Homeland, state or federal disaster area, a Champion Community, an Enterprise Community, an Empowerment Community, a military base closing, or a Brownfield tax credit area.

Figure 1 provides an example of the information provided by the FFIEC’s tool for a specific location.

Figure 1. Sample Output of FFIEC Summary Census Demographic Information

CIP Advance Qualification
Loans and investments for affordable housing, including rental and owner-occupied projects, must benefit households that earn no more than 115% of an area’s median income. To find out if a project is eligible, simply complete and submit a CIP/EDF Application. The application form is short and easy to complete, requiring basic information about the project to be funded, including the rent of each bedroom size in the project. Once you submit the application, the Seattle Bank will respond, generally within a few days, regarding the project’s eligibility.

Loan Approval Coding and Tracking
Seattle Bank members that have been the most active users of CIP/EDF advances have typically developed screening capabilities within their loan approval tracking and coding systems, so that each loan or investment, once originated, is readily evaluated for eligibility. If you are interested in setting up a similar system, you can use the checklist included in the CIP/EDF Application as a source for the queries you’ll need for your loan approval system.

Coming Soon to the Seattle Bank’s Rates Page
In the very near future, the Seattle Bank will be posting specific CIP/EDF rate levels on the Rates page on our Web site.

CIP/EDF funding is continuously available through a noncompetitive application process. Take the time to review our CIP/EDF advance criteria and application. We think you’ll find that reducing your cost of funds may be just a small application form away!

References
¹ Loans to be funded may not have been originated more than three months before the EDF advance is approved.
² “Sell-side” option advances are excluded, and advances have a minimum term of three years.

By Jennifer Ernst, Vice President/Community Investment Officer and John P. Biestman, CFA, Director of Business Development at the Federal Home Loan Bank of Seattle.

IMPORTANT DISCLAIMER, PLEASE READ: The Federal Home Loan Bank of Seattle ("Seattle Bank") publishes What Counts for educational and promotional purposes only. The data and analysis presented are based upon information obtained from sources that we consider reliable. The opinions expressed represent the current opinions of our staff and are subject to change without notice. We make no warranties, express or implied, regarding the accuracy or completeness of any information, analysis, or opinions presented. No part of this newsletter may be reproduced in any manner without the written permission of the Seattle Bank. The Seattle Bank, its employees, agents, and contractors are not registered investment advisors, financial advisors, or broker dealers, and they are not acting in a fiduciary capacity. The information contained in this newsletter does not constitute a recommendation, offer to sell, or solicitation of an offer to purchase any particular investments or products, including without limitation securities of any companies discussed, and it should not be construed as such. It is the reader’s responsibility to evaluate the suitability, risks, and merits of any investment, funding strategy, or business proposal presented in this newsletter. Newsletter content is for our readers' informational purposes only. Please refer to our Terms of Use for details.