The Federal Home Loan Bank of New York ("HLB") has revised the collateral guidelines for residential mortgage collateral and various securities collateral types.
- Temporary Market Value Adjustment for Residential Mortgage Collateral
Due to continued illiquidity in the housing and mortgage market, the HLB will apply a temporary Market Value Adjustment ("MVA") of 3% to all listed one-to-four family, first and second lien, residential mortgage collateral. The total maximum combined discount (CML + MVAs) for these residential asset classes is 35%. This adjustment will take effect during the third week of April 2008.
At this time, there are no CML and MVA changes being assessed across the whole loan, multifamily and commercial real estate mortgage collateral.
- Temporary Increase in Collateral Maintenance Levels and Temporary Market Value Adjustments for Securities Collateral
The HLB has also temporarily increased Collateral Maintenance Levels ("CML") and, in some cases, applied temporary Market Value Adjustments ("MVA") to certain security types. These changes reflect the illiquidity, price volatility and credit conditions in the market. The HLB will use the rating agency collateral description to determine the appropriate security type. These adjustments will take effect during the last week of April 2008.
SECURITY TYPE CML MVA Freddie Mac MBS, Bonds and Discount Notes +2% Fannie Mae MBS, Bonds and Discount Notes +2% Ginnie Mae Residential MBS +2% SBA Notes and Bonds +2% +2% FFCB Notes and Bonds +2% +5% Ginnie Mae Project, MultiFamily, Construction MBS +2% +5% “AAA” Publicly Registered CMOs +2% * “AAA” Publicly Registered Passthroughs +2% * “AAA” Publicly Registered CMBS +2% “AAA” Publicly Registered CMBS IO/PO +5% * MVA dependent upon type of underlying collateral
Securities Pledged for Regular and Repo Advances must have readily ascertainable pricing available from a public pricing vendor.
Please share these changes with staff charged with managing your institution's collateral position and pledging activities. Updated Collateral Position Reports for your institution are available daily through 1Link. If, as a result of these adjustments, a collateral shortfall occurs, we will work with your institution to remedy the shortfall within a reasonable time period.
For more information on these collateral changes please contact your Calling Officer at (212) 441-6700, the SVP of Collateral Services Marianne Totaro at (201) 356-1060, or the SVP Head of Member Services Paul Héroux at (212) 441-6808.