General provision. To qualify as AMA, any assets described in § 1268.3 must be acquired in a purchase or funding transaction only from:

A participating financial institution, provided that the asset was:

Originated or issued by, through, or on behalf of the participating financial institution, or an affiliate thereof; or

Held for a valid business purpose by the participating financial institution, or an affiliate thereof, prior to acquisition by the Bank; or

Another Bank, provided that the asset was originally acquired by the selling Bank consistent with this section.

Special provision for housing finance agency bonds. In the case of housing finance agency bonds acquired by a Bank from a housing associate located in the district of another Bank (local Bank), the arrangement required by the definition of “participating financial institution” in § 1268.1 between the acquiring Bank and the local Bank may be reached in accordance with the following process:

The housing finance agency shall first offer the local Bank right of first refusal to purchase, or negotiate the terms of, its proposed bond offering;

If the local Bank indicates, within three business days, it will negotiate in good faith to purchase the bonds, the housing finance agency may not offer to sell or negotiate the terms of a purchase with another Bank; and

If the local Bank declines the offer, or has failed to respond within three business days, the acquiring Bank will be considered to have an arrangement with the local Bank for purposes of this section and may offer to buy or negotiate the terms of a bond sale with the housing finance agency.