FHLBanks provide their members with a reliable source of funding for housing finance, community lending and asset-liability management as well as liquidity for members’ short-term needs.
The FHLBanks provide long-term and short-term secured loans, called “advances,” to their members. For collateral, FHLBank members primarily use residential mortgage loans, as well as government and agency securities. Community financial institutions may also pledge small business, small farm, small agri-business and community development loans as collateral for advances.
The FHLBanks play an essential role by helping member institutions meet the credit needs of communities everywhere in all economic cycles. Without the FHLBanks, it would be more difficult for local lending institutions to provide credit and financial services for families, farms and businesses in every U.S. state and territory. Credit would be tighter and more expensive.