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

09/04/24

Updates:

OBL continues efforts to push back on the sudden and drastic changes to the Ohio Homebuyer Plus Program administered by the Ohio Treasurer of State (TOS). To that end, OBL President & CEO Mike Adelman sent the attached letter to Treasurer Sprague detailing the industry's strident opposition to the changes. This, along with a compilation of letters and outreach directly from member banks, was presented to the Treasurer and his senior staff to highlight the level of concern the industry has.

However, continued banker involvement is needed. The TOS hosted a webinar last week providing additional information on the changes. Numerous members asked pointed questions of the TOS and continued to voice opposition and concern over the changes. The TOS committed to sharing the slides from the webinar and an updated FAQ. Once that is shared, we will send it out. However, at least as of now, the TOS has not altered the program changes that were released August 19, 2024. While OBL and the industry will continue to advocate for changes, below are a few items to review as soon as possible to determine next steps.

Advocacy Next Steps:

OBL will continue to advocate for changes to the revised guidelines and push back on the proposal. Banks still need to participate in the grassroots advocacy movement listed above. OBL has also had a number of direct conversations with Treasurer Sprague and his senior staff on these issues expressing the industry's collective frustration and strident opposition. In the coming weeks, OBL will be working to set up additional opportunities to discuss the issue directly with Treasurer Sprague and senior staff so that bankers can voice those concerns directly and educate the TOS on the direct impact this has on your institution.

Banker Considerations:

Given the changes and lack of predictability in the program, each bank will need to carefully consider next steps to protect the bank and your customers. We have detailed some considerations below for banks at different stages. The drastic and sudden changes that apply in a retrospective manner to accounts already open should given all banks pause regarding the program. OBL staff can help talk through any questions or try to get answers from the TOS. Please just reply to this email which will go to the entire GR team and Mike Adelman.

• For those in the program:
• • If you plan to no longer accept new applications or open new accounts in the program, please contact the TOS office at [email protected] so that they can update their system and website lists reflecting this. A number of our members have already done this and the online list of participating institutions for the program reflects this with * by those banks. The list can be found HERE.
  • If you decide to completely exit the program, which you would need to work through any potential customer issues and logistics as well as returning all TOS deposits from the program, you must provide 120 days' notice to the TOS at the email listed above.
• For those in the process of entering the program:
• • If you have submitted an application or begun the process to enter the Homebuyer Plus Program and no longer wish to do so based on the changes detailed below, please contact the TOS at [email protected] to let them know that you wish to rescind or cancel your application.
• For those not yet in the program:
• • Given the recent changes and current instability of the program, carefully consider whether it makes sense for your institution to engage in the program and the potential risks involved.

Grassroots Campaign

OBL continues to encourage banks to contact the Treasurer's office through our grassroots campaign 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.

Key Background:

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.

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.

• • Note: The FI Funding Cap is evaluated against the aggregate all program TOS Deposit balances with the FI.
  • 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
• • TOS: 25% x Interest Rate
  • Saver Premium Rate: 75% x Interest Rate
• TOS Deposit Excess Funding Account
• • Q1 2025 TOS: 25% x Interest Rate
  • Q2 2025 TOS: 50% x Interest Rate
  • Q3 2025 TOS: 75% x Interest Rate
  • 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:
• • TOS: 1.275%
  • Saver Premium Rate: 3.825%
• TOS Deposit Excess Funding Account:
• • Q1 2025 TOS: 1.275%
  • Q2 2025 TOS: 2.550%
  • Q3 2025 TOS: 3.825%
  • 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.