Community Development Special Finance Program (CDSFP)

About the Program
How to Apply
Resources

Community Development Special Finance Program

Support for Single-Family Lending

Program Overview

The Community Development Special Finance Program (CDSFP) is designed to increase member support for single-family housing lending activity with more favorable haircut to members who pledge single-family residential loans to certain income-qualified borrowers.

The program works as follows:

FHLB Dallas members will receive a reduced collateral haircut (12 percent) for qualifying mortgage loans to certain income qualified borrowers.
The maximum amount of CDSFP qualified loans to be pledged under the pilot program is $200 million (after pricing and haircuts). Per member is $20 million or 35 percent total assets
During the program’s initial six months, $150 million of the total collateral capacity will be dedicated to Community Development Financial Institutions (CDFIs) and $50 million will be available to other members
After six months, the remaining capacity under the $200 million program cap will be available to all members

This pilot program began March 1, 2024. It will remain open for two years or until $200 million in qualifying collateral is pledged, whichever occurs first.

Note: If the CDSFP reaches its capacity, FHLB Dallas will maintain a first-come, first-served waitlist for members wanting to participate in the program, and we will contact waitlisted members if program capacity becomes available.

$200 Million of Qualifying Collateral (after pricing and haircuts)

Through August 31, 2024, FHLB Dallas is dedicating $150 million of program capacity to CDFI members and $50 million to other members.
From September 1, 2024, through February 28, 2026, the remaining capacity under the $200 million program cap will be available to all members.

Applications for CDSFP funding must be submitted by an eligible FHLB Dallas member financial institution. FHLB Dallas does not fund directly to consumers.

Benefits for Your Financial Institution

Differentiate your institution by increasing your capacity to lend to low- and medium-income households and communities.

Increase your support of affordable housing and economic development by providing funding to a greater number of households and businesses in your community.

Grow your customer and community relationships by expanding your outreach to a broader demographic market.

Community Development Special Finance Program Pilot

Learn how you can support single-family housing with FHLB Dallas’ Community Development Special Finance Pilot.

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Program Requirements

For all loans pledged under the CDSFP, members must certify that borrower income is equal to or below 115 percent of the area median income at the time of mortgage origination. This borrower income qualiﬁcation is consistent with the limit used for FHLB Dallas’ Community Investment Program Advance.

In addition, all loans pledged under the CDSFP must meet all FHLB Dallas’ eligibility requirements as outlined in the Member Products and Credit Policy and Loan Collateral Eligibility Requirements, which can be found on SecureConnect.

Per the program’s parameters, a member’s collateral value under this program is capped at $20 million. FHLB Dallas monitors the program and member limits, and any program-eligible loans with a combined collateral value exceeding the $20 million cap will receive the standard haircut as applicable for members on Custody or Blanket status.

Only loans meeting FHLB Dallas’ eligibility requirements will receive collateral value. Any loan not meeting the eligibility and documentation requirements will be marked a “Problem Loan,” indicating the loan has an exception. Loans with exceptions will not receive collateral value until the exception(s) are cleared. The projected capacity initially reserved for Problem Loans will be released and made available to all members.

Member Eligibility

All FHLB Dallas members are eligible for this program; however, members must meet our minimum required internal credit rating of “D” or higher. Members with an internal credit rating of “E” will be evaluated by FHLB Dallas on a case-by-case basis.

In addition:

Members must comply with the Community Support Requirements/Community Reinvestment Act (CRA)
Members must submit an electronic monthly update on the loan status. Failure to perform the monthly update could result in the loss of collateral value. Members may complete the monthly update to bring delinquent loans current or they may request a release of the delinquent or ineligible loans
Members may replace loans that lose eligibility if there is program availability
Members on Custody collateral status must physically deliver CDSFP Qualiﬁed Loans to FHLB Dallas
Participating members on Blanket collateral status will be required to list CDSFP Qualiﬁed Loans and provide monthly updates

Members who have already pledged loans to FHLB Dallas must inform the Collateral Services team in charge of vault operations which loans they want to transition to the program by submitting a spreadsheet that lists their qualifying loans.

How to Apply

Members must certify that borrower income is equal to or below 115 percent of the area median income at the time of mortgage origination. This borrower income qualiﬁcation is consistent with the limit used for FHLB Dallas’ Community Investment Program Advance
All loans pledged must meet all FHLB Dallas’ eligibility requirements as outlined in the Member Products and Credit Policy and Loan Collateral Eligibility Requirements, which can be found on SecureConnect
A member’s collateral value under this program is capped at $20 million. FHLB Dallas monitors the program and member limits, and any program-eligible loans with a combined collateral value exceeding the $20 million cap will receive the standard haircut as applicable for members on Custody or Blanket status
Only loans meeting FHLB Dallas’ eligibility requirements will receive collateral value
Any loan not meeting the eligibility and documentation requirements will be marked a “Problem Loan,” indicating the loan has an exception. Loans with exceptions will not receive collateral value until the exception(s) are cleared
The projected capacity initially reserved for Problem Loans will be released and made available to all member