Page 32 - February 2018 Disruption Report Flip Book

FEDERAL HOME LOAN BANK JAN.U-FAERBY. 2018
In 2017, Representative Randy Hultgren (R-IL) introduced a bill identical to the HOME Act.
“I want to commend Senators Duckworth, Johnson and Scott for introducing this important piece of legislation which will restore captive insurance companies membership into the FHLB system,” said MBA president and CEO David Stevens. “Captive insurers whose housing focus is aligned with that of the FHLB System act as a stabilizing force in the housing finance market and create a reliable source of capital for lenders and investors. This bill represents an important step forward in recognizing the need for multiple forms of private capital as Congress considers the future of housing finance. MBA looks forward to continuing to work with these and other key senators to advance this important legislation.”
In January 2016, the Federal Housing Finance Agency issued a final rule to amend its regulation on FHLB membership. In a move to exclude REITs from becoming members of the FHLB System, the FHFA changed the definition of “insurance company” to exclude captive insurers in the final rule. Director Mel Watt noted that Congress has the power to reverse the agency’s decision, saying:
Congress has amended the Federal Home Loan Bank Act in the past to allow additional entities to become members of a Federal Home Loan Bank, and it can certainly do so again if it wants some of these entities to be eligible for membership.
Mayer Brown’s Lawrence R. Hamilton, Laurence E. Platt, Jon D. Van Gorp Jon D. Van Gorp, and Matthew Bisanz wrote:
It remains to be seen if this bipartisan bill will overcome legislative inertia. A number of other bipartisan financial reform bills remain in limbo because of ongoing debate on other controversial partisan issues, and there is a limited number of days for Congress to act. We expect the industry will push hard
to get this small piece of relief across the line during this session in order to avoid disrupting the funding models of a number of non-depository mortgage lenders. But for those who would like to form a captive insurer for the first time to access FHLB advances, the HOME Act offers no help. (MortgageOrb. com, Patrick Barnard, 02/02/18; Mayer Brown Legal Update, Lawrence R. Hamilton, Laurence E. Platt, Jon D. Van Gorp Jon D. Van Gorp, and Matthew Bisanz, 02/27/18)
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