More pieces to the Curious Puzzle

Seal of the Federal Housing Finance Board.

Who's on the hook?

The continuing saga of the Housing Finance Authority request to the BOCC to issue $250 MILLION bonds to fund mortgages to first-time low and middle-income home buyers. 

It seems that it was the Federal Government’s intent that the banks and NOT the Federal Government were to be “on the hook” for the issuance of these bonds. 

This is from the FEDERAL HOUSING FINANCE BOARD FY2007-2012 STRATEGIC PLAN 
http://www.fhfa.gov/webfiles/2765/Strategic_Plan_final20072012.pdf  

“The FHLBanks are funded principally by the issuance of consolidated obligations of the FHLBank System in the public capital markets through the OF, which acts as the FHLBanks’ agent. Debt issued by the FHLBanks through the OF is the joint and several obligation of all 12 FHLBanks. Consolidated obligations of the FHLBank System consist of bonds original maturity of one year or longer) and discount notes (original maturity of less than one year). Consolidated obligations are not guaranteed or insured by the U.S. government. However, their status as government sponsored enterprises enables the FHLBanks to raise funds at rates slightly higher than comparable obligations issued by the U.S. Treasury.” 

Have these FLHBanks figured out how to get the Federal Government to guarantee these loans anyway by running them through municipalities such as Hillsborough County who cause to be issued tax-free municipal bonds which ARE somehow guaranteed by GNMA?

GNMA is already being propped up by our federal taxes, taking the risk away from certain banks and investors for risky (sometimes toxic) home loans; perhaps all in the guise of providing “affordable housing”. 

Fred Jacobsen

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