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| Collateral |
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Collateral arrangements will vary with borrower type and qualification, collateral availability and overall
member borrowing. The Bank may require the delivery of collateral into its possession from any member at any time.
With the exception of securities delivered to the Bank or held by an independent third-party custodian acceptable
to the Bank, all collateral securing credit shall be verified to be in compliance with the Advances Agreement and
the Collateral Policy (section VIII of the Credit Guide). The verification shall be in a standard format provided
by the Bank and will be conducted on a regular schedule as determined by the Credit Department. An agreed-upon
procedures audit conducted by the Bank or by an accredited third party acceptable to the Bank will be required.
Members pledging CFI collateral will be subject to an annual field review of such collateral conducted by the Bank.
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| Primary Collateral Loan Values |
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| COLLATERAL TYPE |
OPTION |
COLLATERAL (LOAN) VALUE |
1 - 4 Family Mortgages |
Blanket Lien
Comprehensive Listing
Segregation/Delivery |
75% Book
85% Book
Determined by the Bank1 |
Multi-family Mortgages
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Intermediate Listing
Comprehensive Listing |
60% Book
70% Book |
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Standard |
Preferred2 |
U.S. Treasury and Agency
Debt Obligations
1-4 Family Agency MBS/CMO
Private MBS & CMO |
Delivery
Delivery
Delivery |
95% Market
90% Market
85% Market |
97% Market
95% Market
90% Market |
| Municipal Bonds |
Delivery |
85% Market |
90% Market |
Multi-Family MBS/CMO
Agency MBS
Agency CMO
Private MBS & CMO |
Delivery
Delivery
Delivery |
80% Market
70% to 80% Market
65% to 75% Market |
85% Market
75% to 85% Market
70% to 80% Market |
| Mutual Fund Shares3 |
Delivery |
75% Market |
80% Market |
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- Segregation or delivery of mortgage collateral is typically required by the Bank under special
circumstances, rather than an option selected by the member. Under such circumstances, the Credit Department
will determine the loan value of collateral.
- If safekept at the Bank or with preferred third-party custodians (highly rated, highly capitalized entities
that have executed, and are in full compliance with, the Bank's Third Party Pledge Agreement) as specified
by the Bank. The Bank’s Credit and Collateral Committee can also approve and grant preferred status to
custodians not publicly rated based upon exceptional performance of their custodial duties and creditworthiness.
- Mutual funds must be made up exclusively of securities eligible to secure Bank advances.
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| Community Financial Institution (CFI) Collateral |
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After all Primary Loan Collateral has been encumbered, the Bank will accept CFI Collateral from
creditworthy Community Financial Institutions (members with average total assets at the end of each of
the past three calendar years less than the regulatory level for CFIs, as defined by the Finance Board
from year-to-year).
Eligible CFI Collateral includes mixed-use farm properties, as well as small farm, small business and small
agri-business loans secured by real estate on which the business operates, or by Federal government guarantees
that are assignable to, and can be realized upon by the Bank. Loans otherwise secured, (e.g., by inventory,
accounts receivable, or machinery and equipment) will be considered only if the small farm or small business is
able to demonstrate an ability to service the loans, as evidenced by historically adequate and ongoing cash flows.
The Bank will select acceptable loans from a listing provided by the member. The Bank will only accept CFI loans
that are current and have no significant history of delinquency.
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