WASHINGTON -- The Federal Home Loan Bank of Boston won approval from its regulator on Wednesday to extend a $25 million line of credit to a state housing finance agency.

The Massachusetts Housing Finance Agency will use the advance to fund several multifamily housing programs, including affordable housing programs for low-income families, the elderly, and mentally disabled.

The loan required approval by the Federal Housing Finance Board, which oversees the Home Loan Bank System, because its 12 regional banks normally lend only to member thrifts and banks that own stock in the system.

The funds will help house "segments of the population that are most in need," said Finance Board Chairman Daniel F. Evans Jr. The board previously approved three lines for similar projects.

"We are pleased to have this opportunity to further our involvement in meeting the housing needs of New Englanders," said Michael A. Jessee, president of the Boston bank.

The board also announced that membership in the Home Loan Bank System has risen to 3,830 institutions, from 3,623 at the end of 1992.

There are 2,257 thrift members, 1,522 commercial banks, 38 credit unions, and 13 insurance companies.

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