Letters of Credit
Form a Strategic Alliance with an FHLBNY Letter of Credit
View a sample of an FHLBNY L/C agreement.
L/Cs are low-cost and easy to use. They require a capital stock purchase as outlined in the Capital Plan. The FHLBNY offers two forms of L/Cs to members to support various funding needs:
Regular L/Cs |
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Can be used if you are looking to collateralize: | |
Mortgage Revenue Bonds Community Development Bonds Certificates of Deposit Funds Promissory Notes Construction Funding for Elderly Housing Complexes |
Rental Achievement Guarantees Credit Enhancement for CRA or Community Support IDA Financing Interest Rate Swaps Lease Agreements |
Municipal Letters of Credit (MULOCs) |
As permitted by New York*, New Jersey**, Puerto Rico and U.S. Virgin Islands laws, MULOCs can be used if you are looking to collateralize: |
State, city, court, or local government (municipal/public fund) deposits |
**Other states may allow MULOCs to be used as collateral for public unit deposits.
Key Contacts
Relationship Managers:
(212) 441-6700
What is a Letter of Credit?
The FHLBNY’s L/C process:

Irrevocable Standby L/C:
Provides that the FHLBNY pay out to the beneficiary in the event of a member’s default or failure to perform under a contract or other agreement between parties.
Irrevocable Direct Pay L/C:
Permits the beneficiary to look directly to the FHLBNY for payment of a member’s obligation. It cannot be cancelled before a specific date without the agreement of all parties involved.
Key Contacts
Relationship Managers:
(212) 441-6700
Regular Letters of Credit (L/Cs)
When L/Cs are used for general purposes, they:
Provide credit enhancements for collateral subordinated obligations or other mortgage-backed securities
Provide credit support in the sale of whole mortgage loan portfolios
Facilitate the beneficiary’s drawing of interest payments from a bond issue
Support tax-exempt municipal bonds
When L/Cs are used for eligible housing and community lending,* they:
Provide funds at a discounted price, below regular L/C prices, to finance lending activities
Facilitate transactions that promote home financing, housing activity, or financing of commercial and economic development
Forms
Key Contacts
Relationship Managers:
(212) 441-6700
Municipal Letters of Credit (MULOCs)
Term: 2 weeks to 3 years
FHLBNY MULOC Benefits for Members
When MULOCs are used to collateralize state, city, court, or local government (municipal/public fund) deposits, they:
Utilize the FHLBNY’s triple-A credit rating to secure deposits
Increase a member’s liquidity position by freeing up the securities portfolio for other uses
Increase earnings on the investment portfolio (MULOC can take the place of lower-yielding investments, such as Treasuries)
Reduce the operational expense associated with monitoring deposits (eliminates the need to match CUSIPs, monitor principal paydowns, monitor securities calls, etc.)
Refundable MULOCs
NJ GUDPA Participation
Municipal Information
Laws
Forms