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1. Qualified Collateral
Where
can I find the requirements for qualified collateral?
How
do I qualify a subsidiary as qualified collateral?
Can
deposit accounts at the Federal Home Loan Bank be included
as qualified collateral?
Can
capital stock be used as collateral?
Can
corporate or municipal bonds be used as collateral?
What
kind of collateral may be included under the blanket lien
of 1-4 family owner-occupied residential loans?
Can
loans secured by investment properties, second/vacation
homes, mobile homes, and HELOCs be included as qualified
collateral?
Can
loans secured by manufactured housing be included as qualified
collateral?
Can
Non-Agency Residential MBS be used as collateral?
Can
Commercial MBS be used as collateral?
2.
QCR
How
do I access the Quarterly Collateral Report (QCR) on your
Web site?
Can
I fill out the QCR form electronically?
3. Financial Reporting Requirements
Do I need to submit an audit opinion letter every fiscal yearend?
Why
does the Bank require me to submit call reports or financial
statements?
When
do I need to send call reports or financial statements?
4. Borrowing Capacity/Underwriting
Requirements
How
can I increase my borrowing capacity?
What
should I do if my qualified collateral decreases?
Are
the Bank's underwriting requirements different for delivery
members?
What
is the Bank's position regarding overdrafts on a member's
IDEAL Way account?
5. Definitions
What is the definition of a 1-4 family owner-occupied residential
property?
Can
deposit accounts at the Federal Home Loan Bank be included
as qualified collateral?
Only funds placed in a collateral overnight deposit account
can be included as qualified collateral. A collateral overnight
deposit account pays the same rate as other overnight deposit
accounts.
Can
capital stock be used as collateral?
No. Qualified collateral is limited to collateral that is
listed in Appendix
A of the Products Policy. Per Federal Housing Finance
Board regulations, capital stock is excess collateral, and
members cannot borrow against its value.
Can
corporate or municipal bonds be used as collateral?
No. Per Federal Housing Finance Board regulations, qualified
collateral is limited to collateral that is listed in Appendix
A of the Products Policy. The four main categories of
collateral are:
- residential mortgages;
- securities;
- funds deposited in the Federal Home Loan Bank of Boston;
- and other real estate-related collateral.
The criteria applied to each of these categories of collateral
are detailed in Appendix
A of the Products Policy.
Do
I need to submit an audit opinion letter every fiscal yearend?
Based on Federal Home Loan Bank of Boston records, members
with outstanding borrowings from the Bank at their fiscal
yearend, must provide the Bank with the following:
- Qualified Collateral Report (QCR) to be completed by the
institution's management.
- Positive Assurance Opinion Letter
The "Bank's Independent Auditor's Collateral Verification"
documents provide information regarding the audit requirement,
and are available from the Collateral Department staff.
How
do I qualify a subsidiary as qualified collateral?
In order to qualify collateral held in a subsidiary, please
refer to the collateral
section of the Products Policy. Also refer to Appendix
A of the Products Policy for a description of all qualified
collateral. Forms related to investment subsidiaries are also
available online.
How
do I access the Qualified Collateral Report (QCR) on your
web site?
You may download a printable
version of the QCR (PDF) here.
Can
I fill out the QCR form electronically?
At this time there is no way to fill in this document electronically.
It should be printed and filled in manually. We are working
on converting the application to an electronic format.
How
can I increase my borrowing capacity?
If the member's qualified collateral has increased, and the
member wishes to increase its borrowing capacity, the following
steps must be taken for member's that are assigned by the
Bank to one of the three collateral status groups:
- Members in blanket-lien status:
Can submit a Qualified Collateral Report to the Federal
Home Loan Bank of Boston to increase their overall borrowing
capacity at any given point in time.
- Members in listing status:
As stated in the Products Policy, members pledging collateral
to secure advances are required to update the collateral
balances on at least a semi-annual basis, or more often
as the Bank may require. Members can update their balances
at any time to reflect an increase in their qualified collateral.
- Members in delivery status:
As stated in the Products Policy, members pledging collateral
to secure advances are required to update the collateral
balances on at least a semi-annual basis, or more often
as the Bank may require. Members can also deliver additional
collateral at any time to increase their borrowing capacity.
What
should I do if my qualified collateral decreases?
Per FHFB regulations and the Bank’s Products Policy,
members are required to maintain at all times an amount of
qualified collateral that satisfies the collateral-maintenance
level established by the Bank. If the value of a member’s
pledged collateral declines, management must pledge additional
collateral and/or substitute qualified collateral that is
acceptable to the FHLB in order to maintain sufficient qualifying
collateral to secure advances. For all members, any collateral
deficiency that is identified must be corrected as soon as
they become aware of it and not wait to be notified of the
collateral deficiency by the FHLB. (See Appendix
A and Appendix
B of the Products Policy, as well as the collateral
section of the Products Policy.)
Why
does the Bank require me to submit call reports or financial
statements?
These documents assist the Credit Department in underwriting
members as creditworthy borrowers of the Federal Home Loan
Bank of Boston.
When
do I need to send call reports or financial statements?
Insured members should submit their call reports on a quarterly
basis.
Insurance company members should submit financial statements
quarterly.
Are
the Bank's underwriting requirements different for delivery
members?
As noted in the Credit
Underwriting section of the Products Policy, members in
delivery status must submit "Supplement
A to Application for Advance" to the Bank at least
three business days prior to the expected commitment date
of an advance. Supplement A provides additional credit underwriting
information to the Bank for delivery members.
What
is the Bank's position regarding overdrafts on a member's
IDEAL Way account?
The Bank strongly discourages members from overdrawing their
IDEAL Way account beyond the amount of their IDEAL Way line
of credit. These overdrafts present potential liquidity and
credit risks to the Bank. Therefore, each member should maintain
an IDEAL Way line of credit that is sufficient to cover anticipated
shortfalls in the collected balance of the member's IDEAL
Way account to avoid such an overdraft. The Bank does not
charge members a fee to establish or maintain an IDEAL Way
line of credit.
The IDEAL Way line of credit is overdraft protection for
your account. The Products Policy notes that, "Members
that have obtained an IDEAL Way line of credit may overdraw
their IDEAL Way demand-deposit account and get an automatic
IDEAL Way advance to cover the overdraft. The Bank typically
approves an IDEAL Way line of credit equal to two percent
of a member’s assets." Members are required to
pledge sufficient collateral to the Bank to secure their
IDEAL Way line of credit at all times, including at the time
that the line is established.
For additional information on establishing an IDEAL Way
line of credit, or increasing the size of your existing IDEAL
Way line of credit, please contact the Money Desk at 1-800-357-3452.
What
is the definition of a 1-4 family owner-occupied residential
property?
In accordance with the Bank's definition for collateral purposes,
a 1-4 family owner-occupied residential property is a dwelling
that is the borrower's primary residence. Second homes, vacation
homes, or other investor-type properties do not qualify under
this collateral category. These non-owner occupied 1-4 family
residential loans must be individually listed with the FHLB,
and are subject to individual review and acceptance.
First liens on non-owner occupied 1-4 family loans are included
as "Fully disbursed whole first mortgages on non-owner-occupied
one- to four-family residential property." Second liens
are included in Category 5, "Other Real Estate Related"
collateral, on the QCR. Also note that "reverse annuity
mortgages" should be included as Category 5 collateral.
This is because reverse-annuity mortgages are not fully disbursed
at origination.
What kind of collateral may be included under the blanket
lien of 1-4 family owner-occupied residential loans?
Only First Mortgage loans secured by 1-4 family owner-occupied
residential properties may be included in the blanket pledge
of owner-occupied, 1-4 family loans. The Bank typically applies
a 25 percent haircut to this type of loan.
Can loans secured by investment properties, second/vacation
homes, mobile homes, and HELOCs be included as qualified collateral?
These types of loans can be eligible collateral. In order
to be accepted as collateral they are subject to individual
review by the Bank. These loan types cannot be part of the
blanket pledge of owner-occupied 1-4 family loans. Non-owner
occupied and investment loans typically receive a 50 percent
haircut. Please contact the Collateral Department at (617)
292-9711 for information regarding the Bank's procedure for
pledging these types of collateral.
Can loans secured by manufactured housing be included as
qualified collateral?
In order for a mobile or pre-fabricated home to be eligible,
it must be (i) permanently affixed to the real estate owned
by the borrower, and (ii) the member must provide the FHLB
with a legal opinion from its legal counsel that the mobile
or manufactured home is classified as “Real Property” under
applicable state law and considered by taxing authorities
to be part of real estate.
Where can I find the requirements for qualified collateral?
Qualified collateral is limited to the types of collateral
that are listed in Appendix A of the Products Policy. If you
have a question regarding the appropriate collateral category
for any type of collateral, please contact the Collateral
Department at (617) 292-9729 or (617) 292-9711.
Can Non-Agency Residential MBS be used as collateral?
Publicly offered non-agency residential mortgage-backed securities
(MBS) that represent an unsubordinated interest in cash flows
from pools of 1-4 family residential properties are eligible
collateral for FHLB advances. Subordinate tranches may be
eligible as Category 5, Other Real Estate Related Collateral.
Non-agency residential MBS collateral is subject to individual
review and acceptance by the Bank. Private placements, IO
strips, and PO strips of any security typically are not eligible
as collateral. Please contact the Collateral Department at
617-292-9729 if you are interested in pledging non-agency
residential MBS as collateral, or if you have questions regarding
whether a particular security is eligible as collateral.
Can Commercial MBS be used as collateral?
Publicly offered commercial mortgage-backed securities (MBS)
may be eligible as Category 5, Other Real Estate Related
Collateral. Commercial MBS are subject to review and acceptance
by the Bank. Private placements, IO strips, and PO strips
are typically not eligible collateral. Please contact the
Collateral Department at 617-292-9729 if you are interested
in pledging commercial MBS as collateral, or if you have
questions regarding whether a specific security is eligible
as collateral.
For more information, contact the Collateral Department at
collateral@fhlbboston.com
or 617-292-9729.
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