Products and Solutions Guide - Federal Home Loan Bank of Boston

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Collateral Requirements cont’d.1 A “residential mortgage loan” is a mortgage loansecured by a one-to-four family residential property.For the Bank’s purposes, the definition includesmortgage loans and home equity loans andopen-ended home equity lines of credit, includingthose secured by junior liens.2 The applicable thresholds are noted in Truth inLending - Regulation Z -12 CFR 226.32.Conditions to the Bank’s Acceptance of CollateralIn general, in order for the Bank to accept an asset constitutingeligible collateral, among other things, each of thefollowing conditions must be met:• The asset must be owned by the member free and clearof all other liens or claims, including UCC filings and otherpledge and security agreements.• The asset must not have been in default within the mostrecent 12-month period, except that whole first-mortgageloans on owner-occupied one-to-four family residentialproperty are eligible collateral provided that the borroweris not in arrears by two or more payments.• Mortgages and other loans are considered eligiblecollateral, regardless of delinquency status, to the extentthat the mortgages or loan are insured or guaranteed bythe U.S. government or agency thereof.• The asset must not be classified as substandard,doubtful, or a loss by the member or the member’sregulatory authority, or reported as troubled debt restructuring.• The asset must not be encumbered by private transferfee covenants, including securities backed by suchmortgages, and securities backed by the income streamfrom such covenants ― except for certain allowedtransfer fee covenants (contact the collateral staff if youhave questions).• The asset cannot secure indebtedness — includingmortgages — on which any director, officer, employee,attorney, or agent of the member or of any Federal HomeLoan Bank is personally liable.• The asset must comply with the Subprime and NontraditionalLoan Guidelines as detailed in Appendix C.A residential mortgage loan 1 that is secured by the borrower’sprimary residence — whether pledged individually oras part of a private-label (non-agency) MBS — will not beaccepted as collateral if it meets one or more of the followingcriteria:• The annual interest rate and/or points and fees chargedfor the loan exceed the thresholds of the Home EquityOwnership Protection Act of 1994 (HOEPA); 2• The loan has been identified by a member’s primaryfederal regulator as possessing predatory characteristics;• The loan includes prepaid, single-premium credit insurance;• The loan is subject to state and/or local laws where oneor more of the major credit-rating agencies (Standard &Poor’s, Moody’s Investors Service, and/or Fitch Ratings)will not rate a security (or securities) in which the underlyingcollateral pool contains such a loan;• The loan is defined as a High-Cost Loan, Covered Loan,or Home Loan, generally categorized under one or morefederal, state, or local laws as having certain potentiallypredatory characteristics;• The loan includes penalties in connection with theprepayment of the mortgage beyond the early years ofthe loan; or• The loan requires mandatory arbitration to settle disputes.The Bank reserves the right, in its sole discretion, to refuse to accept certain assets as collateral including, without limitation,assets constituting eligible collateral.collateralMain Telephone: 617-292-9600 • Customer Service: 1-800-358-9709 • Money Desk: 1-800-357-3452 • Relationship Managers, MPF, and Housing & Community Investment: 1-888-424-3863 39
Collateral Requirements cont’d.Collateral Maintenance LevelCollateral Maintenance LevelThe amount of collateral that a member is required tomaintain with the Bank at all times is referred to as itscollateral maintenance level. Unless otherwise specified inwriting by the Bank to the member, a member’s collateralmaintenance level is the aggregate amount of eligiblecollateral as defined in this guide, and accepted by theBank, that has a valuation equal to the aggregate amountof the Bank’s extensions of credit to the member. Whendetermining that a member has met its collateral maintenancelevel, the Bank applies a collateral valuationdiscount (haircut) to all eligible collateral, based on theBank’s analysis of the risk factors inherent in the collateral.The Bank reserves the right, in its sole discretion, to adjustcollateral discounts applied. The market values for eligiblesecurities will be determined on the basis of market bidpricequotations for the same or comparable securities asdetermined by, or in a manner satisfactory to the Bank.In the event that the value of a member’s eligible collateralacceptable to the Bank becomes insufficient to satisfy themember’s collateral maintenance level, including, withoutlimitation, due to market depreciation, loan amortization orloan payoffs, the member is required to pledge additionaleligible collateral acceptable to the Bank so that the aggregateamount of the member’s eligible collateral acceptableto the Bank is sufficient to satisfy the collateral maintenancelevel.All fees and costs incurred by the Bank in connection with itscollateral requirements may be charged to the member.The specific types of eligible collateral, additional conditionsto the Bank’s acceptance of collateral, and the relatedpercentages of book value, market value, or unpaid principal(as applicable) applied to collateral are discussed in moredetail in Appendix A to this guide.collateralMain Telephone: 617-292-9600 • Customer Service: 1-800-358-9709 • Money Desk: 1-800-357-3452 • Relationship Managers, MPF, and Housing & Community Investment: 1-888-424-3863 40
Page 4 and 5: IntroductionBuilding Communities -B
Page 6 and 7: Overnight Funding - Daily Cash Mana
Page 8 and 9: Overnight Funding - IDEAL Cash Mana
Page 10 and 11: Fixed-Rate Advances - Classic Advan
Page 12 and 13: Fixed Rate Advances - Community Dev
Page 14 and 15: Fixed-Rate Advances - Forward Start
Page 16 and 17: Fixed-Rate Advances - HLB-Option Pl
Page 18 and 19: Fixed-Rate Advances - Member-Option
Page 20 and 21: Fixed-Rate Advances - The New Engla
Page 22 and 23: Long-Term Variable-Rate Indexed Adv
Page 32 and 33: Advance RestructuringAdvance Restru
Page 34 and 35: Letters of CreditLetters of CreditS
Page 36 and 37: Asset-Purchase ProgramsAsset-Purcha
Page 38 and 39: Underwriting RequirementsUnderwriti
Page 40 and 41: Underwriting Requirements cont’d.
Page 44 and 45: Collateral Requirements cont’d.Us
Page 46 and 47: Collateral Requirements cont’d.Co
Page 48 and 49: Appendix A - Eligible Collateral an
Page 58 and 59: Appendix B - Anti-Predatory Lending
Page 60 and 61: Appendix B - Anti-Predatory Lending
Page 62 and 63: Appendix C - Subprime and Nontradit
Page 64 and 65: Appendix D - Advances Confirmations
Page 66: Bank ContactsBank ContactsCustomer

Products and Solutions Guide - Federal Home Loan Bank of Boston

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