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.

Anti-Preditory Lending Policy

Primary Collateral Loan Values

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 Intermediate Listing Comprehensive Listing 60% Book 70% Book       U.S. Treasury and Agency    Debt Obligations 1-4 Family Agency MBS/CMO Private MBS & CMO Delivery Delivery Delivery 97% Market 95% Market 90% Market Municipal Bonds Delivery 80% to 90% Market Multi-Family MBS/CMO    Agency MBS    Agency CMO    Private MBS & CMO Delivery Delivery Delivery 85% Market 75% to 85% Market 70% to 80% Market Mutual Fund Shares2 Delivery 80% Market

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. Mutual funds must be made up exclusively of securities eligible to secure Bank advances.

Community Financial Institution (CFI) Collateral

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.