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| Community Investment Program |
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The Community Investment Program (CIP) offers discounted advances
and standby letters of credit to fund affordable housing development
for low and moderate income households and to help develop and revitalize
communities. CIP funds are available on an ongoing basis to member
financial institutions holding stock in the Chicago Federal Home Loan
Bank (Chicago FHLB).
The CIP is governed by the Community Investment Cash Advance (CICA)
Regulations, 12 CFR Part
952. CIP financing may also be used in conjunction with Affordable
Housing Program (AHP) subsidies. |
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| Advances |
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| CIP advances are priced at the Chicago FHLB's cost of funds for
similar maturities. The CIP provides the flexibility lenders need
to link these assets with matching liabilities by offering both a
preferential rate and a term from one month to ten years. CIP rates
are listed on the Chicago FHLB's Daily
Rate Indications. All advances are subject to the credit and collateral
policies of the Chicago FHLB. |
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| Standby Letters of Credit |
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| CIP Letters of Credit (LOCs) can be used to collateralize public
unit deposits and provide credit enhancement for the issuance of taxable
and tax exempt bonds for affordable housing activities. CIP LOCs are
offered at a fee of 8 basis points per annum plus an upfront administrative
fee. Use of the standby LOC may result in a more favorable interest
rate for the bonds, reducing the overall cost of the project. (LOCs
are governed by Federal Regulation 12 CFR Part 960.) |
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| Eligible Uses |
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| Housing projects qualify for CIP rates if they meet one of the following criteria: |
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- Loans for the purchase, refinance, construction or rehabilitation
of owner occupied housing where the household income of
homebuyers/homeowners is at or below 115% of the area median income
(AMI)*.
- Loans for the purchase, construction, refinance or rehabilitation
of rental housing where at least 51% of the units will be occupied by
or affordable to households with incomes at or below 115% of area
median income (AMI)*.
- The Chicago FHLB uses median income guidelines published annually
by the Department of Housing and Urban Development (HUD) to determine
income eligibility and assumes a 4-person household size.
* All CIP-eligible loans must be originated within 90 days
prior to drawing funds with the Chicago FHLB. After the application
for CIP funding is approved, credit is extended for the lesser of
30 days from CIP approval date or 90 days from the loan's orgination
date. The maximum advance amount is based on qualifying loan balances.
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| Application Process |
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To apply for CIP advances or letters of credit, members must submit
a completed CIP
Application and provide documentation to verify that the loan(s)
qualify for the CIP rate. Acceptable documentation includes:
- Owner Occupied Housing: Homeownership worksheet (included in the
CIP Application). The worksheet requests the homebuyers' household
income, county, state, loan amount, loan balance, loan term, and a
loan origination date.
- Rental Housing: Rental worksheet (included in the CIP Application)
or one of the following:
- Schedule of rents
- Rent roll including tenants' incomes
- Copy of deed restriction limiting tenants' incomes
Applications for CIP advances are generally approved within 2 business
days. Applications for CIP LOCs are referred to the Chicago FHLB's
legal counsel following confirmation of CIP eligibility. Legal counsel
will contact the member directly to complete the LOC process.
After members receive approval of their CIP advance applications,
they have a period of time to access the funding: 30 days for applications
with underlying loans that have been previously originated and 90
days for applications with underlying loans that have not yet been
originated. For previously originated loans, the 30-day period will
be reduced if the origination date conflicts with the requirement
that loans must be originated within 90 days prior to drawing funds
with the Chicago FHLB. If the applications are not funded within
these time frames, they expire.
To fund CIP advances, members must notify Community Investment staff
and submit an Application
for Advance signed by two authorized signatories. Community
Investment staff can provide you
with the names of individuals authorized by your institution to
sign for advances.
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Types of Lending That May Qualify for CIP Include:
Mortgage lending to homebuyers earning less than 115%
of the area median income (AMI);
Lending to rental housing deals, where at least half the units are
affordable to households earning less than 115% of AMI.
Lending to community facilities, local businesses, commercial enterprises,
and agricultural operations.
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