FHLBNY Membership Fact Sheets
Frequently Asked Questions by Topic
The Federal Home Loan Bank of New York has compiled a list of Frequently Asked Questions and their answers below. If there is an area of interest that is not on the list, please feel free to contact a Relationship Manager at (212) 441-6700 or e-mail at [email protected].
What is the Federal Home Loan Bank of New York (FHLBNY)?
The FHLBNY is part of the congressionally chartered, nationwide Federal Home Loan Bank (FHLBank) System. The FHLBank System, which was created by Congress in 1932, provides a stable source of readily available, low-cost funds to the members of the 11 regional FHLBanks — federally insured depository institutions, credit unions, and insurance companies. These funds, in turn, help FHLBank members meet the housing finance and community development needs of their communities.
Who regulates the FHLBanks?
The Federal Housing Finance Agency (FHFA), an independent agency in the executive branch of the Federal government, regulates and supervises the 11 FHLBanks, as well as the Office of Finance of the FHLBanks. The FHFA helps ensure that the FHLBanks operate in a financially safe and sound manner, remain adequately capitalized, are able to raise funds in the capital markets, and carry out their housing finance mission.
What is the Office of Finance of the FHLBanks?
The FHLBanks raise funds by issuing debt instruments in the capital markets. The Office of Finance of the FHLBanks is the entity that is responsible for handling the issuance and servicing of all such instruments, and does so on behalf of the 11 FHLBanks. Because these instruments currently are triple-A rated, the FHLBanks are able to borrow at favorable rates and terms. It should be noted that FHLBank System debt is not guaranteed by, and is not the obligation of, the U.S. government. More information about the Office of Finance can be found at www.fhlb-of.com.
Can a foreign financial institution operating in the United States and regulated by a U.S. regulatory agency, such as the Board of Governors of the Federal Reserve System, become a member of the FHLBNY?
No. Members must be chartered by a U.S. federal or state regulatory agency, such as the Office of Thrift Supervision, the Office of the Comptroller of the Currency, the National Credit Union Administration, or a state Banking or Insurance Department.
Where must a financial institution be headquartered in order to become a member of the FHLBNY?
In order to join the FHLBNY, an institution’s “principal place of business” must be located in the State of New York, the State of New Jersey, the Commonwealth of Puerto Rico, or the U.S. Virgin Islands. Ordinarily, the “principal place of business” is the state in which the institution maintains its “home office” pursuant to the laws under which it is organized.
What if a financial institution’s “home office” is in a state located in another Federal Home Loan Bank (FHLBank) district that is adjacent to New York or New Jersey – is there any membership opportunity potentially available with the FHLBNY?
If an applicant’s “home office” is located in an adjoining Federal Home Loan Bank district, the applicant may ask that the Board of Directors of the “other” FHLBank designate, solely for the purposes of FHLBank membership, the “principal place of business” of the institution as being located in the States of either New York or New Jersey. In order to make this request, the applicant must (i) maintain, locate, or hold at least 80% of its accounting books, records, and ledgers in either New York or New Jersey; and (ii) conduct a majority of meetings of its Board of Directors and constituent committees in either New York or New Jersey. In addition, the place of employment of a majority of the applicant’s five highest paid officers must be located in either New York or New Jersey.
Are there worksheets that a prospective member can use to determine if they qualify for membership in the FHLBNY?
Yes. Preliminary worksheets are avaliable on the Preliminary Eligibility page for interested thrifts, commercial banks, credit unions, life insurance companies, property and casualty insurance companies and community development financial institutions that allow these entities to conduct various tests to see if they potentially qualify for membership.
Required Membership Forms
Should an applicant fill in the effective date on the required FHLBNY agreements specified in the Summary of Forms and Agreements (HLB-100)?
No, applicants should not fill in the effective date on these FHLBNY agreements. However, the executor should date his or her signature where indicated.
Are there any pages of the Membership Application (HLB/APP-001) or the Advances, Collateral Pledge and Security Agreement (HLB-101) which must be impressed with an applicant’s corporate seal?
Must an applicant submit a home financing policy written justification?
A home financing policy written justification is required only if the applicant does not have a satisfactory Community Reinvestment Act (CRA) rating or is not subject to the CRA. In such cases, a written justification must be provided to the FHLBNY detailing specifically how and why the institution’s home financing policy is consistent with the Federal Home Loan Bank System’s housing finance mission, as well as how and why the institution’s home financing credit policy and lending practices meet the credit needs of the institution’s community.
Can an applicant’s Corporate Secretary or Assistant Corporate Secretary who executes the Global Authorization Form (GAF) also be listed on the GAF as a person who is authorized to initiate or verify transactions?
Must all applicants submit a Schedule of Customer Subsidiary/Affiliate Structures – Status of Pledge or Non-Pledge of Assets Form (COL-131)?
Must all applicants submit responses to the Subsidiary/Affiliate Questionnaire Form (COL-130)?
An applicant must submit responses to the Subsidiary/Affiliate Questionnaire Form only if it has subsidiaries and/or affiliates. Responses are required for each subsidiary/affiliate.
Must all applicants submit a UCC-1 Filing Information Request Form (COL-139)?
Yes, all applicants must submit a UCC-1 Filing Information Request Form. This is because the information provided will be used to prepare UCC-1 financing statements that are filed by the FHLBNY. In order to protect the FHLBNY’s interest in collateral for outstanding obligations, including advances, under Article 9 of the Uniform Commercial Code, the FHLBNY files a UCC-1 financing statement for each member institution once its membership is approved and becomes effective.
How long will it take the FHLBNY to act on a complete application submission?
In accordance with applicable regulations, the FHLBNY shall act on an application within 60 calendar days of the date the FHLBNY deems the application complete.
What if an applicant is denied membership in the FHLBNY?
If the Federal Home Loan Bank of New York denies a fully and properly completed application for membership, that membership applicant has the ability to file a written appeal of the decision with the Federal Housing Finance Agency within 90 calendar days of the decision.
Once approved, how much Capital Stock must be purchased?
Each member is required to maintain a minimum level of membership stock for as long as it remains a member of the FHLBNY. The amount of required membership stock is, generally speaking, equal to a specified percentage of “mortgage-related assets” held by the member. Members are also required to purchase activity-based stock in an amount, generally speaking, equal to a specific percentage of the outstanding principal balance of advances extended to the member. The FHLBNY’s Capital Plan provides specific details about capital stock purchase requirements.
Does the par value of the FHLBNY’s Capital Stock change?
No. All of the FHLBNY’s capital stock is purchased and redeemed at $100 par value. There is no public market for FHLBNY stock, and the stock is not publicly traded.
Does the FHLBNY pay dividends on its Capital Stock?
The FHLBNY has historically paid cash dividends on its Capital Stock. Payment of dividends is subject to approval by the FHLBNY’s Board of Directors. Historical information about past dividend rates can be found here.
If approved by the FHLBNY’s Board of Directors, when does the FHLBNY pay dividends on its capital stock?
The FHLBNY’s practice has been to pay cash dividends at least six weeks (or longer) after the close of the calendar quarter.
Withdrawing from Membership
Can a member voluntarily withdraw from FHLBNY membership and, if so, what happens to its Capital Stock?
A member which intends to withdraw from membership voluntarily must send a written withdrawal notice to the FHLBNY. As a general rule, withdrawal becomes effective and capital stock is redeemed at par value payable in cash five years following the date on which the FHLBNY received the withdrawal notice. More information about these matters can be found in FHLBNY’s Capital Plan located here.
Can a former member re-apply for membership?
Yes; however, a former member may not be readmitted to membership in any FHLBank for a period of five years from the date on which membership was terminated and all of its stock was redeemed or repurchased.
How are Membership and Activity-Based Stock purchase requirements determined?
Each member is required to purchase Membership Stock in an amount equal to the greater of (i) $1,000 or (ii) 0.125% of the Mortgage-related Assets held by the member, but in no event greater than $50 million, as listed and described in the Capital Plan. In March of each year, the FHLBNY recalculates each member’s Membership Stock purchase requirements based on previous year-end financial information.
Each member is also required to purchase Activity-Based Stock, currently in an amount equal to 4.50% of the dollar amount of any outstanding advances. Participating members in the FHLBNY’s Mortgage Asset Program (MAP®) are required to purchase Activity-Based Stock in an amount equal to a specified percentage (currently 4.50%) of the MAP production sold to the FHLBNY. When booking Letters of Credit (L/Cs), members are required to purchase Activity-Based Stock equal to 0.125% of the notional value of the L/C.
Does the Federal Home Loan Bank of New York (FHLBNY) pay the same dividend on Membership and Activity-Based Stock?
Who decides and declares the dividend?
The Board of Directors, in its discretion, declares the dividend to be paid on the Capital Stock. Currently the dividend rate is determined by the Board of Directors without regard to any particular index.
Is the dividend taxable?
We suggest that our members consult with their tax advisors regarding tax issues.
Is the dividend calculation based on quarter-end balances or averaged over the quarter?
The dividend is paid on a date set by the FHLBNY’s Board of Directors, pro rata, upon the average paid-in value of the FHLBNY’s Capital Stock outstanding during any portion of a quarter. As such, each member that continues to hold Capital Stock is entitled to receive dividends that are declared on all Capital Stock held during the applicable quarter for the period of time the member owns the Capital Stock.
When is the dividend paid?
Normally, the dividend will be announced following a vote that will occur at a Board of Directors meeting that takes place about six to seven weeks after the quarter ends. The FHLBNY will use its best efforts to pay the dividend as quickly as practical after the announcement.
Would you ever consider paying out dividends in Capital Stock instead of cash?
Dividend payments may be in the form of cash, additional shares of Capital Stock, or a combination thereof as determined by the Board of Directors. To date, the FHLBNY has never paid a stock dividend.
What is the par value of the FHLBNY’s Capital Stock?
The par value of FHLBNY Capital Stock has been set by the Board of Directors at $100 per share.
When is the Activity-Based Stock redeemed?
Activity-Based Stock is redeemed daily when advances mature or are prepaid.
Can I purchase additional FHLBNY Capital Stock?
The voluntary purchase of stock in excess of the requirements contained in the Capital Plan described above is currently not permitted.
Do members receive stock ownership certificates?
Shares of FHLBNY Capital Stock are recorded electronically and no stock certificates are issued.
How is Borrowing Capacity calculated?
Borrowing capacity is dependent upon several factors including the amount of qualifying collateral available to secure borrowings, the adequacy of your capital structure and management’s capacity and willingness to purchase additional Federal Home Loan Bank of New York (FHLBNY) stock, as required by the FHLBNY’s Capital Plan. In addition to having sufficient collateral and the ability to purchase additional stock, other criteria imposed by the FHLBNY’s Board of Directors can affect your maximum borrowing capacity, such as:
- Non-Repo Advances that are collateralized by eligible mortgages, securities, and deposits cannot exceed 30% of the member’s total assets unless an exception is requested by the member and approved by the FHLBNY’s Board.
- Overall credit exposure (i.e., total indebtedness including Repo Advances collateralized by eligible investment securities, Non-Repo Advances, Letters of Credit, and Mortgage Partnership Finance® [MPF®] credit enhancements*) credit enhancements*) cannot exceed 50% of the member’s assets.
The FHLBNY’s Capital Plan requires you to hold Activity-Based stock equal to 4.5% of current outstanding borrowings.** The FHLBNY redeems excess capital stock daily.
An example of how the FHLBNY calculates borrowing capacity:
Member ABC is a well-capitalized institution that has
- $250 million in assets;
- $20 million in outstanding FHLBNY advances;
- $125 million in eligible collateral; and
- holds $900,000 in Activity-Based capital stock (4.5% of $20 million).
Without any exceptions or approvals, ABC’s total borrowing capacity for Non-Repo Advances is $75 million (30% of total assets) so long as it has sufficient qualifying collateral and is able and willing to purchase additional stock. If ABC wishes to borrow more than $75 million using qualifying mortgage collateral, ABC must seek and obtain approval from the FHLBNY’s Board of Directors. If approved, ABC’s borrowing capacity could be increased (in 5% increments) to as high as 50% of assets, or $125 million, post-haircut. If ABC has an immediate need to borrow, the FHLBNY may be able to facilitate this borrowing more quickly with the pledge of unencumbered eligible securities collateral.To discuss data deficiencies on mortgage tapes submitted, or for answers to other collateral-related questions, please contact Collateral Services at (201) 356-1065.
*All eligible residential mortgage and securities collateral pledged as collateral to the FHLBNY must comply with all federal, state, and local anti-predatory lending legislation and the Interagency Guidance for Subprime and Nontraditional Mortgage Lending.
**Please note: requirements for Activity-Based capital stock also exist for MPF® participants.
How can I determine my current borrowing potential with respect to collateral?
Why doesn’t my borrowing potential from real estate collateral match my Call Report or the tape that is sent in each month?
There are several reasons why your borrowing potential may differ. The most common reasons for differences include:
- When determining current borrowing potential, max lendable values (haircuts) are applied to collateral pledged.
- Loans may become ineligible because there are data deficiencies on the mortgage listing. Please check to make sure that all required fields have been completed.*
- The Call Report may indicate loans made that might technically qualify as 1-to-4-family residential loans although they are not used for residential purposes.
- The market value of the loan may be greater or less than the book value.
- An amortization discount may be applied, depending on the frequency of tape submissions.
*For questions regarding your Call Report, data deficiencies on mortgage tapes/listings submitted, or answers to other collateral-related safekeeping questions, please contact Collateral Services at (888) 852-8460 or Custody & Pledging Services at (800) 546-5101, select option 2.
I know that I have securities that are safekept at the FHLBNY; why are they not included in the Collateral Customer Summary – Collateral Position Report?
Securities that are safekept with the FHLBNY need to be specifically pledged for advance borrowings. If they are not specifically pledged, then they are not available for immediate borrowing. If you have securities that you would like to pledge towards borrowings, please contact Safekeeping at (201) 356-1067 or your Relationship Manager at (212) 441-6700.
What securities are eligible for borrowing?
In general, any Treasury or U.S. government agency security can be used as collateral, as well as most mortgage-backed securities (pass-throughs and CMOs), including private label issues rated “A- or above” and municipal bonds with a real estate nexus that carry a minimum NRSRO rating of “AA- or above” or equivalent. Ineligible securities include but are not limited to corporate bonds and equities. For a comprehensive listing of eligible collateral, please refer to the Member Products Guide, which can be accessed via 1Link®.
Why have previously approved private label securities become ineligible?
There are several reasons why private label securities may become ineligible. may become ineligible. Since the FHLBNY requires all private label securities to have A- or above ratings, any security that falls below this level will be deemed ineligible. The FHLBNY performs a monthly analysis to verify that pledged securities meet minimum levels of debt-service coverage and LTV values. Should these securities fall below our internal guidelines, they will likewise be deemed ineligible.
Do all FHLBNY advances need to be collateralized?
Yes. To protect both the FHLBNY 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 Maximum Lendable Value, prior to participating in the FHLBNY’s credit programs.
What types of collateral does the FHLBNY accept?
The FHLBNY accepts eligible mortgage loans on 1-4-family residential properties, home equity lines of credit (HELOC), multi-family, and commercial real estate. Agency and U.S. Treasury securities, certain private-label mortgage-backed securities, and certain municipal bonds, as well as cash are also accepted as collateral. Additionally, as of May 2020, the FHLBNY also accepts Paycheck Protection Program (PPP) Loans.
For complete details regarding eligible forms of collateral and their specific haircuts and qualification guidelines, please refer to the Member Products Guide. To obtain a copy, log onto 1Link®, our secure internet banking system.
Can I pledge mortgage loans that are held in an Investment Subsidiary or a REIT to the FHLBNY?
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.
Can members pledge collateral purchased from or serviced by parties other than the member?
Yes. Members may pledge to the FHLBNY 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 FHLBNY with a copy of the Purchase, Servicing and/or Custodian Agreements. A Collateral Rights Agreement recognizing the FHLBNY´s interest in the collateral must be executed by the third party. Please see a copy of the Purchase Pool Guidelines.
How do I find out how much collateral I have at the FHLBNY?
How is Maximum Lendable Value Determined?
Maximum Lendable Values are established to ensure that the FHLBNY always has sufficient eligible collateral securing credit extensions. Maximum Lendable Value’s are typically designated by type of collateral pledged. The collateral is periodically evaluated and adjusted to reflect current market conditions. In establishing the various Maximum Lendable Values, the FHLBNY considers the potential market, credit and liquidity risks associated with each type of pledged collateral. In addition, the Maximum Lendable Value allows for reasonable costs associated with the liquidation of collateral as well as any remaining unknown factors.
However, the Maximum Lendable Values may also be impacted 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 FHLBNY.
Members with a weakened financial condition may be assigned a lower Maximum Lendable Value and may be required to provide additional collateral to cover accrued interest, and estimated early termination fees on outstanding advances.
Must all mortgage data requested be included on the Collateral System Electronic File?
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, loan 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 FHLBNY may assign an adjusted market value discount to the overall portfolio due to data deficiencies in the automated listing. Our Collateral Services team can assist your institution in resolving missing or incorrect data.
Does the FHLBNY charge fees for collateral transactions, pledging, reporting requirements and to review secondary mortgage collateral?
Where can I find collateral-related forms?
Does the FHLBNY accept Paycheck Protection Program loans?
What is an “Advance”?
An advance is a fully collateralized loan that provides essential liquidity and long-term financing to members. Members of the Federal Home Loan Bank of New York (FHLBNY) have access to a wide variety of advance programs that have been designed to assist our members in meeting their credit needs.
What is the longest advance maturity the FHLBNY currently offers?
Advances are available to members from overnight to 30 years.
Where can a member obtain advance rates?
The FHLBNY is no longer posting rate indications on our website. Members can request to receive the daily rate indications via email. Members can also contact our Credit Services Representatives at (212) 441-6600 for a live quote. All rates are subject to change during the day depending on market conditions.
How does a member request an advance?
Can members prepay an advance?
Where can members find out more information about the FHLBNY’s products and services?