Federal Home Loan Banks [FHLB] Law and Legal Definition

The Federal Home Loan Banks [FHLB] provide stable, low-cost funding to American financial institutions for home mortgage loans, small business, rural, agricultural, and economic development lending. The FHLB provides loans only to other banks and not to individuals.

The FHLB allows claim for a prepayment fee by the bank if, and only if the claim is made pursuant to a written contract that provides for a prepayment fee. [12 CFR 360.2]. The principal investments of the FHLB are considered a secured loans to members. The FHLB is the largest U.S. borrower after the federal government.