Iowa Home Loan Bank awards grants

Northwestern Financial Review, Nov 1, 2001 by Dullum, Justin

For the fifth year running, the Federal Home Loan Bank of Des Moines has allotted Rural Home-- ownership Fund grants. This year, the bank awarded $1.5 million to 72 communities across a five state region. "With a large percentage of our customer banks located in rural areas, we are continually looking for ways to help them support and grow their communities," said Patrick J. Conway, Home Loan Bank president. "Affordable housing is critical for the economic development of these rural communities."

The RHF awards banks grants to assist low- and moderate-income families in rural communities and provides them the opportunity for home ownership. Rural homebuyers are able to use these financial resources for down payment, closing and rehabilitation costs. Since the program's inception in 1996, $5 million has been given away to more than 2,000 families.

Individuals and families at or below 80 percent of the area median income within designated rural communities qualify for funding. First-- time homebuyers in rural areas are eligible to receive up to $5,000, which does not have to be repaid. All other qualifying recipients, including second-time homebuyers, may receive upwards of $2,500.

"The grant money is set aside from our affordable housing program," said Curt Height, who oversees community investment for the Home Loan Bank of Des Moines. "In the spring we offer applications.

Then, we draw communities' names out of a computer, so it's a sort of lottery. The more banks that apply from a given state, the more chance that state has to receive more funding."

The Bank's affordable housing efforts are funded by 10 percent of the Bank's earnings. Fifteen percent, or $1.5 million, whichever comes first, of that money is earmarked for the rural homeownership program.

All members of the Home Loan Bank are eligible to apply, unless they failed to dole out funds received the previous two years by their respective deadlines. Lottery winning banks, in towns with a population of 15,000 people or less, may reserve a minimum total of $5,000 to a maximum of $25,000. Up to $50,000 may be reserved for towns with populations greater than 15,000 people but equal to or less than 25,000. "We keep drawing banks from a hat until we run out of money," Height said.

Eligible households must be located in the market area of the bank receiving funds. This year, members are required to disburse these funds to eligible households by.September 30, 2002. Funds not distributed are recycled into the next year's fund.

"Households never have to pay back the funds if they stay in the house for five years," said Height. "It's a successful program. The more banks that submit applications, the better chance they have of getting grants for their communities."

In addition, the Federal Home Loan Bank of Des Moines distributes millions of dollars through its Affordable Housing Program grants. Earlier this year the bank awarded nearly $7 million for 42 projects in Iowa, Minnesota, Missouri and the Dakotas.

By Justin Dullum