Revised: New Retention Agreement Requirement 

February 4, 2016

Effective January 29, 2016, members of the Federal Home Loan Bank of Chicago (the “Bank”) are required to record a retention agreement against owner-occupied properties that received funds through Community Investment programs, including Downpayment Plus® (“DPP®”) and Downpayment Plus Advantage® (“DPP Advantage®”) ─ the Bank’s set-aside programs ─ and the competitive Affordable Housing Program (“AHP”).

The Bank has removed the security instrument (mortgage lien) requirement for owner-occupied transactions in these programs.

REVISED DETAILS: All owner-occupied competitive AHP projects awarded in 2015 and 2016 DPP® and DPP Advantage® transactions are required to record a retention agreement.

Owner-occupied competitive AHP projects awarded in 2013 and 2014 may choose to record a mortgage (using existing Bank Illinois and Wisconsin templates with incorporated regulatory retention language) or a retention agreement.

The retention agreement provided by the Bank contains retention provisions set forth in Part 1291 of the Affordable Housing Program regulations. It may be found on the Program Policy and Forms page of the Bank’s website. 2016 DPP® and DPP Advantage® transactions and 2015 owner-occupied AHP projects should disregard any previous security instrument or retention agreement forms and use the new retention agreement for all transactions closing on or after the effective date. 

For units located in Wisconsin and Illinois, members are required to record the retention agreement verbatim, as provided by the Bank, and may not record a mortgage lien in the amount of the subsidy against the property.

For units located outside of Illinois or Wisconsin, members are required to record the retention agreement or a comparable document enforceable under applicable law that is in the proper form for recording under applicable law.

DPP® and DPP Advantage® out-of-district transactions paired with FHA-insured loans are required to record the retention agreement verbatim, as provided by the Bank, and may not record a mortgage lien in the amount of the subsidy against the property. As a reminder, competitive AHP subsidy may not be paired with FHA-insured loans.

For owner-occupied competitive AHP projects, the requirement to record a retention agreement supersedes previous policy that required a security instrument and applies retroactively to all unfunded (started or not started) owner-occupied transactions as of the effective date.

Please disregard any previous security instrument or retention agreement forms and use the new retention agreement for all transactions closing on or after the effective date.

If you have any questions regarding this policy change, please contact Community Investment at 312-565-5824 or ci@fhlbc.com.

Federal Home Loan Bank of Chicago
200 East Randolph Drive
Chicago, IL 60601
www.fhlbc.com		 Copyright © 2016, Federal Home Loan Bank of Chicago. "Downpayment Plus," "DPP," "Downpayment Plus Advantage," and "DPP Advantage" are registered trademarks of the Federal Home Loan Bank of Chicago.   
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