About Collateral

To maintain our position as a reliable, cost effective, and accessible source of credit for our members, all credit extensions are provided on a secured basis. The HLB’s collateral guidelines are established to protect our members’ investments in the HLB by ensuring our financial integrity and long-term viability.

1. Do all HLB advances need to be collateralized?
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   • Yes. To protect both the HLB and members’ interests and to comply with regulations, advances and other obligations are extended only on a secured basis. Members must have sufficient qualifying collateral pledged, meeting a pre-established Max Lendable Value, prior to participating in the HLB’s credit programs.
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2. What types of collateral does the HLB accept?
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   • The HLB will accept eligible mortgage loans, certain securities, cash or deposits maintained at the HLB, and Other Real Estate Related collateral (ORER), such as commercial real estate loans or residential second liens, as acceptable forms of collateral. A detailed listing of all eligible forms of collateral, along with their specific qualification guidelines, can be found in the HLB’s Member Products Guide, currently on pages 34-39. To obtain a copy, log onto 1Link^sm, our secure internet banking system, or contact your Calling Officer.
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3. Can I pledge mortgage loans that are held in an Investment Subsidiary or a REIT to the HLB?
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   • Normally, collateral transferred to a subsidiary or affiliate is no longer eligible to be pledged by the member. However, this can be easily remedied by executing a Subsidiary/Affiliate Collateral Pledge and Security Agreement and by providing information about the third party for legal review, along with your board of directors´ or shareholders´ resolutions approving the transaction.
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4. Can members pledge collateral purchased from or serviced by parties other than the member?
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   • Yes. Members may pledge to the HLB mortgage collateral that is purchased from or serviced by parties other than the member, or held by a custodian other than the member, including their own banking subsidiaries and trust operations. Members who need to pledge collateral purchased or serviced by other parties are required to provide the HLB with a copy of the Purchase, Servicing and/or Custodian Agreements. A Collateral Rights Agreement recognizing the HLB´s interest in the collateral must be executed by the third party. You may find a copy of the Purchase Pool Guidelines on the HLB´s website at www.fhlbny.com/members under Forms & Agreements in the General Collateral Forms.
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5. How do I find out how much collateral I have at the HLB?
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   • Members can determine how much collateral they have at the HLB by reviewing their Collateral Position Report. The report enumerates a member’s borrowing potential (based on collateral pledged and accepted by the HLB) and is available on 1Link. Through 1Link, you can also arrange to have your report automatically delivered to you via email. If you are not signed up on 1Link, please contact your Calling Officer.
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6. How is Max Lendable Value Determined?
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   • Max Lendable Values are established to ensure that the HLB always has sufficient eligible collateral securing credit extensions. Max Lendable Value’s are typically designated by type of collateral and are periodically evaluated for reasonableness and adjusted to reflect current market conditions. In establishing the various Max Lendable Value's,  the HLB considers the potential market, credit and liquidity risks associated with each type of pledged collateral. In addition, the Max Lendable Value allows for reasonable costs associated with the liquidation of collateral as well as any remaining unknown factors.  However, the Max Lendable Value may also be affected by the overall financial condition of the members, or third party entities (i.e., pledgors, servicers, custodians) involved in the relationship between the member and the HLB.  Determination of the appropriate Max Lendable Value, for each collateral type, or resulting from unique member issues, will be determined by the HLB.  
     
     Members with a weakened financial condition may be assigned a lower Max Lendable Value in order to provide sufficient collateral to cover estimated early termination fees on outstanding advances.
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7. Must all mortgage data requested be included on the Collateral System Electronic File?
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   • Yes. In order to gain the best borrowing potential possible against a member’s reported mortgage collateral and the fastest turnaround possible, it is important that complete and accurate data be provided. Lack of key fields, such as the appraised value, loan-to-value, ARM data, property type, load purpose code, and mortgage insurance information, will result in discounted values calculated for the reported collateral or the rejection of the loan. In addition, the HLB may assign an adjusted market value discount to the overall portfolio due to data deficiencies in the automated listing. Our Collateral Services Group can assist your institution in resolving missing or incorrect data.
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8. Does the HLB charge fees for collateral transactions, pledging, reporting requirements and to review secondary mortgage collateral?
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   • Yes. All fees are listed in the Collateral Services Fee Schedule. You can view the schedule in our Member Products Guide or on 1Link. After you log onto 1Link , click on the “Tools” link on the upper right-hand side of the screen, and then click on the “Manuals and Guides” section.
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9. Where can I find collateral-related forms?
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   • Collateral-related forms can be found on the HLB’s website at www.fhlbny.com/members under Forms & Agreements > Collateral
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