OBL Continues Advocacy Campaign Against Sudden and Drastic Changes to Homebuyer Plus Program

08/28/24

The Ohio Treasurer of State's Office (TOS) recently communicated upcoming changes to the Ohio Homebuyer Plus Program for banks participating in the program or in the process of entering the program. Below you will find the information as provided from the TOS detailing those changes. The program, thus far, has been both a win for Ohio consumers and OBL members, with over 115 banks already opening accounts or in the pipeline to offer them soon. With the massive uptick in utilization of the program, the TOS recently approached the OBL to discuss possible changes to the program to ensure the longevity of the program and continued ability of banks to open new Homebuyer Plus accounts. Despite previous assurances of capacity in the program, the utilization and popularity of the program significantly outpaced any other program that has been offered by the TOS. Once notified that there would be program revisions, OBL worked to ensure any changes to the program allowed it to continue offering accounts and vital liquidity, while grandfathering in those accounts opened under the previous rule so they are not negatively impacted. The proposed changes to the program, some of which will take effect September 1, 2024, will likely impact your bank's strategy on pricing, participation in the program, or your reinvestment of state dollars.

OBL shares in your frustration with these changes and the short notice, as we believe it will negatively impact the program and your ability to offer this attractive product to your customers. OBL has heard from members throughout the state that these changes will force institutions to either stop offering the program or significantly curtail the benefits previously promised to consumers under the previous rules of the program. Due to the harmful impact that would have on OBL members, their consumers, and the communities they serve, the OBL has implemented a robust advocacy strategy to push back on the changes.

The ask right now is for the TOS to pause any proposed changes to the program to allow for a full discussion of the impact, goals, and detrimental downstream impact to the banking industry, consumers, and the state. Given the timetable, we simply need more time for a meaningful discussion and opportunity to educate on impact. Below are the steps OBL is taking to advocate on behalf of the industry on this issue, next steps, and ask for your participation in this campaign so that the TOS hears your individual bank's story. Please take action as soon as possible.

Grassroots Campaign:

As noted above, OBL has activated a grassroots campaign for members to directly contact the Treasurer's office to express concerns over the changes. There are templates in the system detailing concerns with the changes but the most compelling message that will drive the point home is bank specific information to show individual impact of these decisions. To that end, please customize the message with information from your bank to help cut through the noise and drive the point home. However, please remember that comments sent to the TOS are to a public entity and become public record so be thoughtful your advocacy.

To send a message to the Treasurer's office on this issue, please click HERE.

Treasurer's Office Hosting Webinar on Changes:

Additionally, the Ohio Treasurer of State's Office will be hosting a webinar for all financial institutions, banks and credit unions, next Thursday, August 29, 2024, from 2PM to 3PM to discuss the changes and there will be a question-and-answer portion at the end. OBL encourages all members to attend that webinar. To register for the webinar, click HERE.

Overview of Proposed Changes from the Treasurer's Office Notice to Participants:

Ohio Homebuyer Plus FI Funding Cap (Effective September 1, 2024)

The FI Funding Cap will be set at $50 million in order to preserve capacity for newer and additional FI participation.

Saver/TOS Deposit Funding (Effective September 1, 2024)

• FIs with Fewer than 50 Savers Funded: Savers approved after September 1, 2024, will be funded at $100,000/Saver until the FI has 50 funded Saver Accounts. (Note: not subject to "true ups").

• FIs with More than 50 Savers Funded: Savers approved after September 1, 2024, will be funded at $25,000/Saver until the FI reaches the FI Funding Cap.

• FIs at the FI Funding Cap: At the FI's discretion, new Savers may be submitted for approval, but no TOS Deposit Funding will be provided, nor will the Treasurer's office provide "true up" funding for any $0.00 funded Savers.

Excess Funded TOS Deposits (Effective January 2025)

Per the design of the program, TOS deposit balances will always be greater than aggregate Saver account balances at an FI; however, some FIs have received disproportionate TOS funding. To avoid adverse liquidity impacts on those partner FIs, the Treasurer's office will allow excess funding to remain on deposit with the FIs for calendar year 2025.

To differentiate the nature of these deposits, the Treasurer's office will segregate TOS Deposits into separate accounts as follows:

• TOS Deposits Saver Funding Account: This account balance is determined by multiplying $25,000 by the total number of approved Savers with open accounts as of December 31, 2024. The balance in this account will fluctuate as new Savers are funded and as Savers close their accounts. The TOS Deposits Saver Funding Account is subject to the FI Funding Cap.

• TOS Deposit Excess Funding Account: This account balance is determined by subtracting the TOS Deposits Saver Funding Account balance from the total outstanding TOS Deposit funding as of December 31, 2024, and is not eligible for "true up" funding.

o Note: The FI Funding Cap is evaluated against the aggregate all program TOS Deposit balances with the FI.

o Note: An FI has the option to coordinate the return of funds from the TOS Deposit Excess Funding Account balance to the Treasurer's office. The funds can be returned in whole or in part.

• TOS Deposit Interest Rates (Effective January 2025)

• The Treasurer's office will utilize a new interest rate calculation methodology (Interest Rate). The Interest Rate will be determined and published quarterly, and the rate will be based on the existing 3-month Bid Ohio rate determination methodology (which closely emulates the 90-day U.S. Treasury Bill rate.) The Interest Rate is applied to the TOS Deposit Accounts as follows:

• TOS Deposit Saver Funding Account

o TOS: 25% x Interest Rate

o Saver Premium Rate: 75% x Interest Rate

• TOS Deposit Excess Funding Account

o Q1 2025 TOS: 25% x Interest Rate

o Q2 2025 TOS: 50% x Interest Rate

o Q3 2025 TOS: 75% x Interest Rate

o Q4 2025 TOS: 100% x Interest Rate

• Example: The following uses the most recent 3-month Bid Ohio funding at 5.10%:

• TOS Deposit Saver Funding Account:

o TOS: 1.275%

o Saver Premium Rate: 3.825%

• TOS Deposit Excess Funding Account:

o Q1 2025 TOS: 1.275%

o Q2 2025 TOS: 2.550%

o Q3 2025 TOS: 3.825%

o Q4 2025 TOS: 5.100%

The Treasurer's office will publish updated FI Operating Guidelines prior to September 1, 2024. Additionally, the Treasurer's office will continue to analyze data collected from the FI monthly files to formulate any additional program adjustments that may be needed.

Public link

Please use the above public link if you want to share this noodl on another website.