FHLBank Approves Changes to MPSG

TOPEKA, Kan., Sept. 29 -- The Federal Home Loan Bank of Topeka, a district bank in the Federal Home Loan Bank System, issued the following 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) (http://www.fhlbtopeka.com/resources/Related/2178-MPSG.pdf). Policy changes become effective Oct. 1 and lending values for collateral reported via the Qualifying Collateral Determination (QCD) form will be effective with the filing of the Dec. 31, 2014, QCD. Lending Value Adjustments

Lending values for several types of collateral are being adjusted to reflect the application of our secured member collateral methodology, which is the periodic evaluation of the lending value assigned to each type of asset. The secured member collateral methodology includes factors for credit, market volatility and liquidation costs.

These changes result in increased collateral lending values for the majority of asset types. A handful of collateral types decreased in lending value, but only by 1%.The overall increase in collateral lending value reflect the economic improvement in the Midwest as well as the strong assets FHLBank members have on the books.

Click here for a table summarizing all of the lending value changes. Other Policy Changes

Underwriting Requirement Eliminated - the underwriting requirement on residential construction mortgages that called for an annual financial statement for any note structure which did not require an annual principal payment and allowed for negative amortization or interest only payments has been eliminated. Obtaining annual financial statements is a common underwriting practice with multifamily and commercial construction loans but not with residential construction mortgages. In order for these loans to be considered eligible collateral, the member is required to conduct an annual credit review on any negative amortization or interest only loan that does not require an annual principal payment.

Transfers of Credit Obligations - policy language was changed to clarify that in addition to transfers of advances and letters of credit between FHLBank Topeka members, members may also transfer a standby credit facility, derivative or forward settling advance (FSA) commitment with FHLBank's prior approval. A processing fee of $100 is charged to the member transferring the credit obligation.

Bank Secrecy Act and Anti-Money Laundering Compliance - in conjunction with FHLBank's newly adopted Anti-Money Laundering Policy, members must maintain effective anti-money laundering controls designed to prevent the use of FHLBank's products and services to facilitate money laundering, the funding of terrorists, fraud, or other criminal activity, as a condition for the extension of credit by FHLBank.

Blanket Pledge Agreements - policy language was modified to clarify the requirement that all members are required to enter into a Blanket Pledge Agreement with FHLBank Topeka unless other arrangements are authorized by FHLBank Topeka due to a legal conflict or impediment with executing a Blanket Pledge. These other arrangements are typical for housing associates and insurance companies and may be necessary for some community development financial institutions.

If you have any questions about these changes, please contact your regional account manager (http://www.fhlbtopeka.com/s/index.cfm?SSID=20#External) or the Lending Desk (lending@fhlbtopeka.com) at 800.809.2733.

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