[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