FHLBank Boston implements policies and procedures to protect our members, support key functions, and mitigate risk. Please review How the Bank Manages Operational Risk and the Anti-Predatory Lending Policy available in Appendix B of our Products + Solutions Guide. Additionally, we offer the following frequently asked questions regarding our Anti-Predatory Lending Policy as it relates to mortgage loans and securities backed by residential mortgage loans pledged as collateral by members or purchased from members.
My institution pledges mortgage-backed securities (MBS) to FHLBank Boston that are issued and guaranteed by a U.S. government agency (such as Ginnie Mae) or a U.S. government-sponsored enterprise (such as Fannie Mae or Freddie Mac). Are these MBS eligible as collateral under the Bank's APL Policy?
Members may assume that MBS issued and guaranteed by a U.S. government agency or by a U.S. government-sponsored enterprise, including MBS issued and guaranteed by Fannie Mae, Freddie Mac, or Ginnie Mae, are eligible collateral in accordance with the Bank's APL Policy.
For MBS other than those issued by a U.S. government agency or U.S. government-sponsored enterprise, members should consult the prospectus of the investment to determine whether the security complies with FHLBank Boston’s Anti-Predatory Lending Policy. The prospectus for an MBS typically includes a representation from the issuer that the loan pool does not include loans that do not comply with applicable federal, state, and local laws, including anti-predatory lending laws. The prospectus also typically notes that any loans found to be in violation of such laws subsequent to the issuance of the security will be repurchased by the seller of the loan.
If you have questions as to whether the prospectus for your security includes such a disclosure, you should contact your investment advisor or the broker-dealer from whom you purchased the security.
Are mortgage loans secured by multifamily property (five or more units) subject to FHLBank Boston’s Anti-Predatory Lending Policy?
The Anti-Predatory Lending Policy requires residential mortgage collateral pledged to FHLBank Boston and residential mortgages purchased by FHLBank Boston to comply with applicable federal, state, and local anti-predatory lending laws. The Federal Home Ownership and Equity Protection Act (HOEPA) defines a residential mortgage transaction as involving the financing of a consumer's principal "dwelling," meaning a residential structure that contains one to four units, including individual condominium or cooperative units. Many state and local anti-predatory lending laws contain either a similar definition or make reference to definitions in HOEPA or the Truth in Lending Act (TILA). If you have questions regarding whether a loan complies with all applicable laws, you should contact your legal advisor and/or your regulator.
My institution originates residential mortgage loans with prepayment fees out to five years. Are these loans eligible collateral under the Anti-Predatory Lending Policy?
These loans may be eligible collateral if the prepayment fee is permissible under applicable law. The second paragraph of the Anti-Predatory Lending Policy states that "The Bank requires that residential mortgage collateral...compl[y] with applicable federal, state, and local anti-predatory lending laws and other similar credit-related consumer-protection laws, regulations, and orders designed to prevent or regulate abusive or deceptive lending practices." Therefore, if a loan does not comply with applicable law for any reason, including prepayment fees, such a loan is not eligible as collateral.
FHLBank Boston acknowledges that there is uncertainty in some jurisdictions regarding the acceptable prepayment fees in accordance with applicable anti-predatory lending laws. FHLBank Boston is unable to provide definitive guidance in situations that involve legal interpretations. FHLBank Boston does make available a list of some current anti-predatory lending laws that apply to "high cost loans" and "covered loans" as defined by FHLBank Boston. This list is included in Appendix C of the Products + Solutions Guide. Note that this list does not include all anti-predatory lending laws that are in effect in all jurisdictions. If you have questions regarding whether a loan complies with all applicable laws, you should contact your legal advisor and/or your regulator.
My institution does not pledge collateral that is located in a subsidiary or affiliate to FHLBank Boston. Am I required to complete the Subsidiary/Affiliate Representations and Warranties Certification?
No. Only members that have pledged collateral that is contained within a subsidiary or affiliate, such as a REIT or PIC, are required to complete the Subsidiary/Affiliate Representation and Warranties Certification. All members are required to complete the Member Representation and Warranties Certification. However, you may also wish to complete the Subsidiary/Affiliate Representations and Warranties Certification if you intend to pledge collateral that is held in a subsidiary or affiliate in the foreseeable future.