Timothy J. Barrett
President and CEO, Federal Home Loan Bank of Boston
Industry experience: 37 years
Age: 65
While high costs continue to dominate the housing market, Federal Home Loan Bank of Boston has been making an effort to support affordable homeownership through three different homeownership assistance programs for lower and moderate-income individuals and families in Massachusetts and other New England states.
One of those programs is Lift Up Homeownership, which aims to assist people of color with purchasing a home and to help address the well-documented racial homeownership and wealth gaps within New England. Through Lift Up Homeownership, $50,000 grants are provided to local banks and credit unions so they can help people of color earning up to 120 percent of the area median income who are buying their first home in Massachusetts and the other five New England states.
FHLBank Boston also launched a new permanent rate buydown initiative as part of its continuing efforts to promote affordable homeownership. This program is designed to lower the mortgage interest rate by up to 2 percent for homebuyers earning up to 80 percent of the area median income.
Q: Can you discuss and describe the overall mission of the bank?
A: As a cooperative, we are member-owned and -capitalized, and we’re regional in that we’re out of New England and there are 10 other banks [like us] throughout the country. We look at it as two missions. One being to provide our members with liquidity and funding for their communities that they serve, specifically in areas that help housing. As a byproduct of that, one of the key missions is for us to set aside funding to support affordable housing and community development. One needs the other.
What we do with our membership generates earnings and those earnings can come out in very different ways and different programs. In housing and community development part of the mission, by statute, we’re required to do some things, and some things we do on our own. What we have to do, by statute, is set aside 10 percent of our earnings for affordable housing and community development. Here in New England for the Boston bank, probably the last eight years, we have been above and beyond that 10 percent requirement here. Part of our mission in New England is to do more than just what we consider the requirement. I want to say it goes back to probably 2015, 2016 where we started to contribute and create what we call “voluntary programs” that we feel have big impact in the community and are targeted for New England.
Q: What do you think about the bank system’s de facto role as lender of last for banks given the stigma of going to the Fed?
A: You’re hitting on a topic that’s come up probably more since last year when unfortunately, a few regional banks outside of New England had difficulties, some failed and some were taken over. That topic, I think, was a response to that liquidity crisis. Part of the reason that the system was created 90 years ago was to provide liquidity and funding to our members and our members, even 90 years ago were depositories, insurance companies and the reason for that was in the ’30s, things weren’t really great. That’s been a consistent theme for us.
We have always been a liquidity provider when things were bad but when things are normal, our job in liquidity is not just when a bank is in trouble. We’re in with our membership in their funding needs. As a wholesale bank, we’re providing funding every day. We’re engaging with our members on liquidity, and we’ve been doing that for years and one of the things we were not shy to say to our members, you need a lot of sources of liquidity, and we’re one of them.
We’ve encouraged, and we’re helping our members get connected to the Fed. We’re engaging with the Fed quite a bit to maybe find a better connection between our members and the Fed. Honestly, this whole topic is interesting, but really what we focus on is: Are our members viable? Do they need funding? We provide it.
We are not competing with the Fed at all. That’s not even through our mandate but we will say we are hearing it. We watched what went on in March – not a good thing. We’ve heard that maybe some banks could have got funding from the Fed. Maybe they should have had a different liquidity profile. We don’t know. We’re outsiders looking at that but when it comes to liquidity, we’re part of the solution for our members, and we are constantly saying, “Have more sources.”
Q: How important is affordable housing and being able to ensure that first-time homebuyers are able to afford homes?
A: I think housing [construction], for years and years, has not kept up so there’s a supply issue right now. We’re providing [banks] funding to get out in their community, to provide mortgages even at a high rate but they’re out there doing that. So that’s one of the avenues. The second avenue is that we have been providing support above and beyond what the statutory limit is. Some of the things that we’ve done recently are down payment assistance programs with our members. We’re providing down payment assistance for low-income individuals. We have three types of programs there. The one I want to highlight that hits on another issue that’s happening throughout the country, but definitely in New England, is we have a voluntary down payment assistance program. It’s one of three, and this one is called Lift Up Homeownership – not only providing down payment assistance, but we carved it out to help with the racial wealth gap and the eligibility requirements are for people of color. In a sense, we’re hitting what we think are two needs out there Down payment assistance helps folks, especially when prices are going higher on down payments. This particular program helps folks of color, especially in New England where it’s been a major need. We’re on year two of that, and we’ve doubled the size of it.
Barrett’s Five Favorite Activities
- Going to the beach with his grandkids
- Playing basketball
- Working on his golf game
- Reading up on current events and historical novels
- Watching the New York Giants football team
