Collateral Requirements

Each member is required to pledge sufficient eligible collateral to secure advances (both new and outstanding), lines of credit, letters of credit, and other amounts payable to FHLBank Boston, as well as to participate in the asset purchase program, and to enter into derivative transactions.

Collateral Types and Guidelines

Below is an overview of the types of collateral accepted.

Please note that the lien valuation will vary depending on your institution type. Full details can be found in the Products + Solutions Guide. You may also contact our Collateral team.

Cash:

  • For members that sign the Specific Lien Advances Agreement and choose to pledge only cash, a 2% collateral maintenance level is required.

Securities:

  • U.S. Government-Backed Securities
    • Interest-only or principal-only strips of securities, residuals and Z tranches are not acceptable.
  • Fannie Mae/Freddie Mac Mortgage-Backed Securities & Agency Collateralized Mortgage Obligations (CMOs)
    • Interest-only or principal-only strips of securities, residuals and Z tranches are not acceptable.
  • Commercial Mortgage-Backed Securities (CMBS)
    • The total discounted value of this collateral cannot exceed 2 times the member’s GAAP capital.*
    • The lowest rating by Moody’s, S&P, or Fitch will be used.
    • A rated CMBS will be limited to a discounted amount of 20% of total CMBS pledged. Domestic CMBS deals only.
    • The maximum threshold is 25% for any single loan or borrower.
    • This collateral must be publicly traded, and a daily market price must be available.
    • Minimum of 50 loans in the issue.
    • Only senior tranches are eligible.
    • All loans must be secured by a first mortgage.
    • The maximum weighted average loan-to-value is 80%. Minimum weighted average Debt Service Coverage Ratio is 1.2 times.
  • Municipal Securities
    • The total discounted value of this collateral cannot exceed 2 times the member’s GAAP capital.*
    • Proceeds of the security have been or will be used to finance the acquisition, development, or improvement of real estate.
    • The securities must be rated by two or more Nationally Recognized Statistical Ratings Organizations (NRSROs) – Moody’s, S&P, Fitch or Kroll.
    • Bonds rated A3/A- cannot be on negative watch by an NRSRO. If split rating, the lowest rating is used.
    • Securities must be publicly registered and traded and a daily market price must be available.
    • The minimum issuance size is $25 million.

Loans:

  • Fully Disbursed Whole First Mortgages Secured by Commercial Real Estate
    • The total discounted value of this collateral cannot exceed 2 times the member’s GAAP capital. (Use statutory capital if you do not file GAAP.)
    • Certain participation loans are acceptable.
  • Fully Disbursed Whole First Mortgages Secured by Residential properties

Please see Products + Solutions Guide for the specific criteria that applies to residential properties.

Ineligible Collateral

FHLBank Boston does not accept as collateral derivatives of eligible securities that contain excessive interest-rate and/or other financial risk, including, but not limited to:

  • interest-only or principal-only strips of securities,
  • residual or “Z” tranches of collateralized mortgage obligations,
  • securities backed by reverse mortgage loans (HECMs),
  • private placement securities,
  • certificates of participation,
  • variable rate products or short-term products that involve auction rates, and
  • third-party support/enhancements other than those collateralized by the U.S. government/agent and the following types of revenue bonds: pension obligation, tobacco settlement, special revenue/assessment, tax increment/allocation, and industrial development bonds.

Pledging Collateral

To pledge collateral, you must complete a Qualified Collateral Report (QCR). This report can be completed electronically, and FHLBank Boston has a secure file transfer site that allows you to update your collateral pledges. Our Collateral department can provide the QCR.

​Releasing Collateral

For collateral that you would like released, please be sure to review the process and complete the necessary form (either the Consent to Release Securities or the Collateral Request to Release Pledged Loan) and remit it to our Collateral department.

Collateral Frequently Asked Questions

We often receive questions from members about collateral and collateral management. Here are some of our more Frequently Asked Questions.

eNotes Coming in 2021

eNotes as eligible collateral for residential mortgage loans will be accepted in 2021. Review the  guidelines and requirements.