[Federal Register: September 10, 1999 (Volume 64, Number 175)] [Notices] [Page 49186-49187] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr10se99-105] ======================================================================= ----------------------------------------------------------------------- FEDERAL HOUSING FINANCE BOARD [99-N-11] Modification of Approval for the Federal Home Loan Bank of New York's Community Mortgage Asset Activities Program AGENCY: Federal Housing Finance Board. ACTION: Notice. ----------------------------------------------------------------------- SUMMARY: On August 18, 1999, the Federal Housing Finance Board (Finance Board) adopted Finance Board Resolution No. 99-43 authorizing modifications to the Federal Home Loan Bank of New York's (FHLBank of New York) Community Mortgage Asset Activities Program (CMAA). The Finance Board originally approved CMAA on July 3, 1996 (Finance Board Resolution No. 96-44). While not obligated to publish notice for these modifications of the previously approved CMAA Pilot Program, the Finance Board, in the spirit of full disclosure, hereby provides notice of the CMAA modifications described herein. Further, the FHLBank of New York will not implement modifications to CMAA until the staff of the Office of Supervision (OS) conducts a pre-implementation examination of the modified CMAA Pilot Program and confirms that appropriate program policies, procedures and controls have been established. In no case shall implementation occur prior to the end of this 30-day notice period. DATES: Comments must be received in writing on or before October 12, 1999. ADDRESSES: Individuals wishing to submit comments should provide written comments by mail to: Elaine L. Baker, Secretary to the Board, Federal Housing Finance Board, 1777 F Street, NW, Washington, DC 20006. Comments will be available for public inspection at this address. Background On July 3, 1996, the Finance Board approved a request by the FHLBank of New York to establish a pilot program (CMAA) under which the FHLBank of New York proposed to fund up to $250 million in participation interests in housing and community development loans originated by members and eligible non-member borrowers and meeting the income targets established for the Community Investment Program (CIP). Finance Board approval was subject to certain conditions set forth in Finance Board Resolution No. 96-44. The FHLBank of New York requested that Finance Board Resolution No. 96-44 be modified to lift the CIP restrictions, define member to include affiliates and subsidiaries of members and allow the FHLBank of New York to purchase mortgages originated by its members (including subsidiaries and affiliates of such members) from that member, pool the mortgages, participate back to the originating member the credit support tranche of the pool, and sell to the originating member or any other member any other tranches of the pool. The Finance Board approved those modifications in Finance Board Resolution No. 99-43. As modified, the CMAA resolution would authorize the FHLBank of New York to operate a Sequential [[Page 49187]] Participation Program under which the FHLBank of New York would (i) acquire whole residential mortgage loans, originated by its members (including subsidiaries and affiliates of such members) and eligible non-member borrowers that have an original balance falling within the conforming loan limits established pursuant to 12 U.S.C. 1717(b)(2), (ii) pool those mortgages and divide the mortgage pool into three tranches, consisting of a short cashflow tranche, a longer cashflow tranche, and a credit support tranche that would be sufficient to enhance the pool at least to the level of subordination afforded double-A rated mortgage-backed securities and which would act as first loss coverage for the life of the pool or until the position is exhausted, (iii) sell the credit support tranche of the pool back to the member or eligible non-member borrower that originated (or whose subsidiary or affiliate originated) the loans, and (iv) sell either of the non-credit support tranches to any member or eligible non-member borrower of the FHLBank of New York. As indicated, while the Finance Board has formally revised Finance Board Resolution No. 96-44 to make the modifications requested, CMAA as modified will not be implemented by the FHLBank of New York until the end of the 30-day notice period, and even then not until the completion of a pre-implementation examination. FOR FURTHER INFORMATION CONTACT: Christina K. Muradian, Senior Financial Analyst, Office of Policy, Research and Analysis (202) 408- 2584, Federal Housing Finance Board, 1777 F Street, NW, Washington, DC. Bruce A. Morrison, Chairman. [FR Doc. 99-23568 Filed 9-9-99; 8:45 am] BILLING CODE 6725-01-P