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By Ken Willis
The Federal Home Loan Bank of Boston's Housing and Community Investment
Department has announced changes in the rules governing its Affordable
Housing Program (AHP) and Equity Builder Program (EBP) in the 2005
funding rounds.
The Bank updates its AHP implementation plan annually to adapt
to the diverse housing applications received by the department and
to keep up with changes in the housing industry, including construction
costs and operating expenses.
The Bank proposed minor changes for the AHP and EBP in 2005. These
changes include:
Requiring home-ownership-counseling agencies that provide pre-
and post-purchase counseling to first-time home buyers under the
AHP and EBP to include in their training curriculum financial literacy
and information alerting borrowers to the characteristics of predatory
lending.
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Changing the measurement methodology for the "economic
diversity" category to allow points for projects located
in a census tract where the median income is no more than 80
percent of the Metropolitan Statistical Area/Metropolitan Division
(MSA/MD) median income, in which 20 percent of the units are
market-rate units; or for projects located in a census tract
where the median income is at least 100 percent of the MSA/MD
median income, in which at least 20 percent of the units are
reserved for very low-income households.
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Making minor changes to the program's feasibility parameters
based on industry standards and norms, including construction
cost, management fees for projects with less than 50 units,
operating reserves, the interest rate on zero-interest-rate
financing programs, and the net cash flow as a percentage of
effective gross income test.
Changes in the AHP and EBP are vetted through a series of steps,
including measuring the implications of changes through statistical
analysis, examining housing trends, and incorporating expert advice
and review from the Bank's Advisory Council.
The Advisory Council is composed of two housing practitioners from
each New England state. Council members are experienced in rental-
and ownership-housing production and have expertise in housing policy
at the state and federal levels. The council works hand-in-hand
with the Bank's housing staff, senior management, and board of directors
to strategize and craft application criteria and program priorities.
Ken Willis is assistant vice president / housing and community
investment at the Federal Home Loan Bank of Boston.
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