What is the Federal Home Loan Bank Act?

The Federal Home Loan Bank Act was signed into law by President Hoover in 1932.

The goal of the legislation was to make liquidity more accessible to banks for the purpose of making home loans, so that more Americans could acquire permanent residences. The bill established the FHL Bank system, which now consists of 11 FHL banks.

The Federal Home Loan Bank Act of 1932 established the FHL Bank system, which is a co-operative banking network for banks and other lending institutions who make home loans. The FHL banks are owned by their member institutions, who purchase stock in the bank and are then permitted to take loans out from it, using that money to provide loans to customers.

The Federal Housing Finance Agency, or FHFA, oversees the FHL banks as well as Fannie Mae and Freddie Mac. According to the FHL website, over 80 percent of the nation’s lending institutions make use of the FHL for their liquidity needs. Loans are priced at a small spread over comparable US Treasuries.

Funds for the FHL are generated through the sale of Consolidated Obligations to the general public, but, while the FHL System is registered with the SEC, the 11 individual FHL banks are not.

What is a Home Equity Loan?
What is a Balloon Loan?