News

At its recent meeting, FHLBank Topeka’s Board of Directors approved changes to its Member Products Policy. Details are available in the online Member Products and Services Guide (MPSG). Policy changes become effective January 1, 2015.

Policy Changes

1. Leasehold Estates Accepted on Certain Types of Loans Under Case-By-Case Request – Underwriting requirements for agricultural real estate, commercial real estate and commercial construction mortgages were changed to state that leasehold estates will only be accepted as eligible collateral on a case-by-case basis due to the limitations and/or restrictions that may be identified on the leasehold agreements.

2. Underwriting Requirement Removed from Multifamily Construction Loans – The underwriting requirement that required a Phase 1 Environmental Site Assessment for certain properties was removed because the assessments are not typically required for multifamily projects.

3. MPF Supplemental Quality Control Reviews – Quality control reviews will be performed more frequently to allow better opportunities for timely remediation of exceptions. Reviews were previously done on an annual basis.

Modifications Made to Clarify Existing Policy

Various sections of policy relating to CDFIs, housing associates and members executing a specific pledge agreement were modified to make existing policy clearer to the reader. The changes made more apparent the following policy requirements:

1. Community development financial institutions (CDFIs) are required to pledge collateral to fully secure estimated prepayment fees on advances issued on or after April 1, 2008, that have maturities or call dates in excess of three months.

2. CDFIs, executing a blanket or specific pledge agreement, are required to submit loan collateral using the Collateral Loan Listing – Expanded template and are limited to the eligible collateral assets identified under the Delivered (Expanded) Lending value. The Collateral Loan Listing – Expanded template gives FHLBank the detail information needed to obtain precision from a third-party vendor.

3. CDFIs, housing associates and members executing a specific pledge agreement must comply with the following underwriting requirements:

Conventional mortgages on one-to-four family residential real property

• Loan-to-value ratio (LTV) cannot exceed 80%, and if applicable, the combined LTV; cannot exceed 90% (appraiser must have Member of the Appraisal Institute Professional (MAI) professional designation); and

• Loans cannot be more than 60 days delinquent anytime in the past 12 months.

Mortgages on multifamily residential real property

• Loan-to-value ratio (LTV) cannot exceed 70%, and if applicable, the combined LTV cannot exceed 80% (appraiser must have Member of the Appraisal Institute Professional (MAI) professional designation);

• Loans cannot be more than 60 days delinquent anytime in the past 12 months;

• The loan’s debt service coverage (DSCR) must equal or exceed 1.25; and

• Annual credit reviews on the loans pledged must be submitted to FHLBank upon completion.

Commercial real estate loans

• Loan-to-value ratio (LTV) cannot exceed 70%, and if applicable, the combined LTV cannot exceed 80% (appraiser must have Member of the Appraisal Institute Professional (MAI) professional designation):

• Loans cannot be more than 60 days delinquent anytime in the past 12 months:

• The loan’s debt service coverage (DSCR) must equal or exceed 1.25;

• Annual credit reviews on the loans pledged must be submitted to FHLBank upon completion; and

• Secured by properties that have a contractual payment stream (includes only office, retail and industrial).

If you have any questions about these changes, please contact your regional account manager or the Lending Desk at 800.809.2733.