2010 Member News

Collateral-Related Updates to Seattle Bank Forms and Manuals

June 25, 2010

Dear Seattle Bank Members,

The Federal Home Loan Bank of Seattle (Seattle Bank) recently updated its Financial Products and Services User Guide, Collateral Manual, and related forms. The purpose of this Member News is to inform you of the changes we have made.

The Financial Products and Services User Guide and Collateral Manual have been updated to clarify that in order for residential mortgages and private-label mortgage-backed securities to qualify as eligible collateral, they must comply with the Seattle Bank’s Responsible Lending Policy. This policy requires that these loan types comply with federal, state, and local anti-predatory lending laws applicable to the pledgor and other similar credit-related consumer protection laws, regulations, orders, and federal banking agencies’ Interagency Guidance on Nontraditional Mortgage Product Risks published on October 4, 2006, and Statement of Subprime Mortgage Lending published on July 10, 2007. The Seattle Bank’s updated Responsible Lending Policy is available on our Web site, www.fhlbsea.com, under Our Company / Corporate Governance.

In response to our members’ comments and suggestions, we have also updated our Commercial Real Estate Quarterly Certification Form to include a separate line for reporting eligible collateral that is not subject to debt-service-coverage requirements. We hope that this change will eliminate confusion surrounding how this information should be reported. The updated form can be found on our Web site under Member Services / Forms and Manuals.

Finally, over the last year there have been substantial changes to the eligibility requirements, processes, and procedures for pledging loans under the physical possession collateral arrangement. All of these changes have been reflected in the updated Collateral Manual, found on our Web site under Member Services / Forms and Manuals. In addition, the pledge forms used to pledge individual loans have been updated. If you are currently under the physical possession collateral arrangement, we strongly recommend that you review the updated Collateral Manual, as these changes may impact your current pledging procedures and collateral update processes.

For questions regarding the physical possession collateral arrangement, please contact our Collateral Department at collateral@fhlbsea.com or 800.973.6223.

For questions about your collateral position with the Seattle Bank, please contact your Relationship Manager.

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