The HomeProtect Program (HPP) is a $250 million Advances Program designed to encourage member financial institutions to provide first mortgage refinancing to homeowners with incomes at or below 115 percent of Mortgage Revenue Bond (MRB) (pdf) income guidelines who are at risk of delinquency or default. The HPP provides a discount off regular Advances programs, providing funds at the FHLBank’s cost of funds.

Funds are targeted to refinance first mortgages for primary residences in Kentucky, Ohio, or Tennessee, but may also be used to refinance first mortgages for primary residences in any other state in which a member does business. Funds may be used for mortgages in amounts up to Freddie Mac conforming loan limits.

The rate of interest, points, fees, and all other charges must be reasonable and customary; the first mortgage loan must comply with applicable federal, state and local anti-predatory lending laws, regulations and orders designed to prevent or regulate abusive and deceptive lending practices and loan terms; the first mortgage loan closing may not include single-premium credit life insurance; and the first mortgage loan may not exceed the annual percentage rate, or points and fees thresholds of the Home Ownership and Equity Protection Act of 1994 and its implementing regulations (Federal Reserve Board Regulation Z).

The FHLBank expects that funds will be used to provide first mortgages affordable to borrowers at their fully-indexed rates.

Borrowers may use the funds to pay off the first mortgage principal outstanding, other mortgages or debts secured by the property, plus any delinquent amounts owed, including fees, loan origination and processing fees.

Members are encouraged to offer homebuyer counseling to their borrowers. Counseling can be provided by the member or some other party. The counseling should be based on programs offered by organizations recognized as experienced in homeowner counseling. The counseling program should cover, at minimum, mortgage financing, credit-worthiness, and household budgeting in order to better inform the homebuyer about the financial commitments of homeownership. A list of HUD-approved counseling agencies can be found on HUD's Web site.

HPP funds may be used with other mortgage or grant assistance programs, depending on the requirements of those programs, but may not be used with other programs of the FHLBank (such as the AHP, Welcome Home, or the American Dream Homeownership Challenge).

The FHLBank expects that funds will be used to provide first mortgages affordable to borrowers at their fully-indexed rates.

HPP Advances are made available to eligible financial institutions on a secured basis only and are subject to the normal underwriting and collateral policies of the FHLBank.

The FHLBank has set aside $250 million for the HPP. HPP Advances are available until June 30, 2009, on a first-come, first-served basis, subject to the availability of funds.

Funds are priced daily at the FHLBank's cost of funds and are generally processed within two business days from receipt of application.

Funds must be drawn or the HPP rate locked within six months of approval.

The FHLBank’s regular fixed-rate (one to 20 years) and mortgage based Advances programs (CMP, MMA, SPMMA, Balloon Payment MMA) are eligible.

Member institutions may borrow HPP funds in amounts up to $50 million in HPP Advances on an annual basis.

Member institutions applying for HPP Advances should complete and submit an HPP Application that describes the use of funds and which provides certain certifications. The Application is submitted to Housing and Community Investment (HCI) which assigns the HPP discount. After approval by HCI, the HPP funding becomes a regular credit transaction that requires completion of an Advances Application Agreement submitted to the Credit Department. Funds are disbursed into the member’s DDA account with the FHLBank.

For information or assistance, please contact Housing and Community Investment at 888-345-2246.