Member Advantage

Second Quarter 2017

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José R. González


Last month, the FHLBNY’s management team gathered with our Directors for the 2017 strategic Board off-site meeting. Spanning three days of comprehensive meetings, this annual event covers every aspect of our cooperative, from our performance to the products we offer, from our housing programs to the technology that runs our business, and from our membership to the environment in which we all operate. Each year, the strategic off-site provides us with the opportunity to discuss, develop and act on the strategies, initiatives and new products that drive our cooperative forward.

Our Board is at the center of this activity, not only during the annual off-site, but at each of its meetings that take place throughout the year. Ours is an active and involved Board, comprised of industry leaders in banking, housing and community development. Our Member Directors – who are drawn from the shareholders of our cooperative – provide significant insight into the needs of the members we serve, while our Independent Directors offer counsel as to how our cooperative can best support our many housing and community development partners. And together, all of our Directors provide management with guidance that is vital to the strength and performance of our franchise, ensuring that our cooperative continues to act on our mission and ably serve our members and our region.


José R. González
President and Chief Executive Officer




MAX logo

The Mortgage Asset Exchange (MAX) is a new multi-seller to multi-buyer residential mortgage loan trading platform developed by MAXEX, LLC (MAXEX), a leading financial services technology company founded by long-time mortgage industry veterans. Through a strategic alliance with MAXEX, the FHLBNY is now able to offer qualified members the ability to sell residential mortgage loans to a wide variety of end Buyers, including some of the largest purchasers in the secondary market. Participating members will also be able to buy loans from other participating members, whether for investment purposes, to meet CRA requirements, or for other aggregation needs.

As a single destination for pricing, selling, purchasing, reviewing, and settling loans, MAX will help enable FHLBNY members to transact in the secondary mortgage market with greater confidence and more operational efficiency than ever before.

The MAX pilot program is now live and open to all FHLBNY members. We encourage you to take a look at MAX for your secondary market needs, as it supports a wide array of QM-eligible conventional mortgage products (both jumbo and conforming), new origination as well as seasoned loan transactions, flow and bulk execution strategies, and best efforts or mandatory delivery options. While the program will initially only involve servicing-released transactions, it is expected that a servicing-retained execution will also be available in the near future.

Key Features of MAX

Single Clearinghouse and Counterparty

MAXEX’s wholly-owned subsidiary, MAXEX Clearing LLC, acts as the clearinghouse and is the single counterparty to both the Buyer and the Seller in each transaction. Standing in the middle as principal, MAXEX Clearing buys the loan from the Seller and simultaneously resells it to the Buyer, on identical, fully-disclosed terms, including identical representations and warranties. This creates a more efficient market by allowing Sellers to sell loans to, and Buyers to buy loans from, a wide spectrum of mortgage market participants, while only having to maintain a direct, contractual (and operational) relationship with one counterparty – MAXEX Clearing.

Single, Standardized Contract

All approved Buyers and Sellers (collectively, "Exchange Participants") agree to be governed by MAX Rules, which include standardized loan sale terms and a common set of representations and warranties that were developed through extensive collaboration with many of the market’s leading participants. In stark contrast to the fragmented and “bespoke” nature of today’s secondary market, the MAX platform allows Exchange Participants to execute a single, standardized legal agreement and effectively be able to transact with numerous counterparties on the same terms for every loan transaction.

Centralized Approval and Monitoring

All Exchange Participants are qualified and continually vetted by MAXEX and the FHLBNY. As a long-standing practice, the FHLBNY routinely assesses the credit profile and ongoing financial health of each its member institutions, and therefore, is uniquely positioned to ensure that all Sellers on MAX are financially-sound originators. With its centralized approval and monitoring features, MAXEX aims to provide Buyers with a high degree of confidence when transacting on MAX.



As the economy continues to improve so does loan demand amongst our members. However, sustaining commensurate deposit growth is becoming more difficult due to regulation creating heightened competition for retail deposits. Large banks (total assets of $50 billion and greater) are now required to meet the requirements of the U.S. Interagency’s (comprised of the Federal Reserve, FDIC and OCC) Liquidity Coverage Ratio, which compels them to compete for retail deposits like never before. Smaller institutions are also feeling the impact of this regulation, and will continue to do so as their liquidity and interest rate risk positions are threatened. Now is the time to work towards optimizing your liquidity position at the FHLBNY to help you continue to attain and sustain balance sheet growth.

Maximize Your Borrowing Potential with a Collateral "Check-up"

Various collateral requirements are in place for credit extensions in order to help protect members’ investments in the cooperative and maintain the FHLBNY’s ability to serve as a reliable, cost-effective, and accessible source of liquidity. With this in mind, "fix the roof" while it’s sunny — don’t wait for an emergency or regulatory exam to focus on ways to improve your liquidity position.

For example, did you know that if you are pledging whole loan residential mortgages, there may be opportunities to pledge additional mortgage types, such as home equities, multifamily and commercial real estate loans? There is also the potential to enhance the valuations of your pledged mortgages by providing additional data points in your monthly loan listing. Perhaps your loan data submission can be improved to rectify data issues that cause loans to be excluded from your pool of pledged mortgages — we can help with that as well. Your investment portfolio may also present another opportunity to broaden your pledged collateral. Be ready for that rainy day — let us perform a diagnostic collateral check-up to determine ways to expand your available liquidity.

Learn the “ins & outs” of collateral pledging: FHLBNY.COM/COLLATERAL

Keep Liquid Securities Unencumbered & Enhance Margins with the Municipal Letter of Credit (MULOC)

MULOCs are tri-party agreements between the member institution, the FHLBNY, and a municipal depositor, by which the FHLBNY guarantees performance by the member institution with its obligation to the municipal depositor. The MULOC is deemed as acceptable collateral to secure municipal deposits by the states of New York and New Jersey, as well as the U.S. Virgin Islands territory, and a member may use whole loan mortgages to collateralize the MULOC while leaving liquid securities unencumbered. The MULOC is operationally efficient and is a cost-effective alternative to purchasing low-yielding securities for the sole purpose of collateralizing municipal deposits.

Furthermore, using whole loan mortgages to collateralize MULOCs enable municipal deposits to be used for lending in your respective communities, rather than for funding security collateral. Regular Letters of Credit (L/Cs) are also available for other general purposes, such as facilitating residential housing finance or community lending, to assist with asset/liability management, liquidity, or other funding purposes.

Read about our L/Cs as an alternate form of collateral: FHLBNY.COM/LC

Consider Using FHLBNY Advances for Funding instead of Obtaining Repurchase Agreements

Through our advance programs, the FHLBNY offers members the ability to pledge relatively illiquid whole loan mortgages to obtain liquidity. Advances may offer a more economical and efficient way to obtain funding versus delivering securities for repurchase agreements — yet another way to keep liquid assets unencumbered.

Take a fresh look at our credit products: FHLBNY.COM/CREDIT

Your Calling Officer is always available to discuss how our advance programs may be used to meet your funding needs, and to help find ways to improve your institution’s lending capacity for the benefit of our communities. Contact us today at (212) 441-6700.



Explore the FHLBNY’s corporate headquarters as a resource for your next business meeting, and the Education Programs the FHLBNY can easily provide as an educational segment to your agenda.

Capital Markets and Member Services - captioned

Contact your Calling Officer today to schedule your visit and tour.
We look forward to hosting you.

Phone: (212) 441-6700





Since our last edition, two members joined the FHLBNY cooperative:
» Advanced Financial FCU
» South Jersey Federal Credit Union


The FHLBNY looks forward to connecting with our members and business associates in person at the following upcoming events. Please visit the Upcoming Events section on our website.



Related Links

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Third Quarter 2018
Board Election Updates and Solutions for Balance Sheet Management in a Rising Rate Environment

Second Quarter 2018
Looking Back While Moving Forward