FHLBank Approves Changes to MPSG
June 30, 2014
At its recent meeting, FHLBank Topeka’s Board of Directors approved changes to its Member Products Policy. Policy changes are effective July 1, 2014, and will be reflected in the online Member Products and Services Guide (MPSG).
Available Advance Term Extended – The maximum term available on Amortizing Fixed Rate Advances was extended from 180 months to 360 months. This change was made to assist members with funding longer-term assets, such as mortgages, and can also be used in conjunction with Forward Settling Advance Commitments that are being used to fund construction/permanent mortgages.
Collateral Reporting Templates Changed – Changes were made to FHLBank’s collateral reporting templates to better reflect the data needed for loan valuation for those members required to deliver and pledge collateral to FHLBank. The loan data requirements remain the same for members that have executed an Advance, Pledge and Security Agreement - Blanket Pledge and who report loan collateral via the Qualifying Collateral Determination (QCD) form.
Housing Associates and members that have executed a Blanket Pledge and are required to deliver and pledge collateral to FHLBank now have two options when providing loan data to FHLBank. These institutions may choose to use the Collateral Loan Listing - Limited Reporting template or the Collateral Loan Listing - Expanded Reporting template. The difference between the two templates is the amount of loan data provided by the member or housing associate, which impact the methods used by FHLBank in calculating market value for the specific loan asset pledged. The columns in the schedule of eligible collateral reference the lending value percentage FHLBank will apply to the market value.
The Collateral Loan Listing - Limited Reporting template allows those members or housing associates on delivery to provide only the essential loan data fields for the specific loan pledged and delivered to FHLBank. Market values for loans submitted using this template are determined by taking the lower of: (1) current unpaid principal balance, (2) a present value calculation of the future cash flows discounted at the current market rate as determined by FHLBank for the loan type and remaining term, or (3) the loan value as determined by FHLBank’s third-party pricing vendor, if valued at the last quarterly update.
The Collateral Loan Listing - Expanded Reporting template requires members or housing associates to provide a more complete listing of loan data fields. Insurance company members are required to use this reporting template. Loans reported under this template are charged a quarterly fee of $40 for third-party pricing services. Market values for loans submitted using this template are determined by taking the lower of: (1) current unpaid principal balance or (2) the loan value as determined by FHLBank’s third party pricing vendor. FHLBank has eliminated the “present value calculation of the future cash flows” from the market value calculation as a result of the member supplying expanded loan data fields, which provides a greater level of precision when obtaining pricing from our third party pricing vendors.
Restricted Assets Classifications and Overall Restricted Limitations Removed for Delivered Collateral - Restricted asset classifications and overall limitations on pledging restricted assets no longer apply for any member delivering and pledging collateral to FHLBank. Only members reporting collateral via the QCD form are subject to the restricted asset classifications and overall restricted limitations
Financing Statement Filings Clarified – Policy language was added to clarify that UCC-1 financing statements will be filed for members and housing associates that have signed a Specific Pledge Agreement. The UCC-1 filing references the assets pledged and delivered to FHLBank.
If you have any questions about these changes, please contact your regional account manager or the Lending Desk at 800.809.2733.