The Seattle Bank Accepts More Eligible Collateral!

At the Seattle Bank, we are continuously looking for opportunities to improve service and make borrowing simpler and more convenient for our members. Over the past year, we have made a number of changes that have streamlined our credit and collateral procedures—and that have allowed our members to pledge more types of collateral. We have shared these changes with you as they occurred, but thought it might be helpful to summarize them for your easy reference to help you maximize the benefits of your membership in the Seattle Bank.

Newly Eligible Collateral for Securing Advances
The Seattle Bank now has programs in place to accept these additional collateral types:

  • Commercial Mortgage-Backed Securities (CMBS) – Conduit, fixed-rate CMBS rated at least BBB.
  • Participated Loans – Loan participations in which the member has either purchased or sold a portion of the loan, if pledging is not restricted by the participation agreement.
  • Special and Single-Purpose Commercial Real Estate Loans – Restrictions on the total amount of special-purpose or single-purpose commercial real estate pledged have been eliminated.
  • Interest-Only Commercial Real Estate Loans (CRE) – CRE with interest-only payments of five years or less.
  • Completed Residential Construction Loans – Single-family residential construction loans if construction is complete and the property is awaiting sale. Specific approval to pledge completed residential construction loans is required.
  • Subprime Residential Mortgage Loans – Single-family residential loans identified as subprime or originated through subprime lending programs may be eligible. Specific approval to pledge subprime loans is required.

Standard Eligible Collateral
In addition to the new collateral types, the Seattle Bank continues to accept a wide variety of other collateral to secure advances, including:

  • The guaranteed portion of USDA, Farm Services Agency (FSA) and Bureau of Indian Affairs (BIA) loans
  • Small Business Administration (SBA) pool securities
  • U.S. Treasury and agency securities, including notes, bonds, and non-mortgage debt issued by the Federal Home Loan Bank System, Freddie Mac, Fannie Mae, Ginnie Mae, and Farm Credit System consolidated bonds
  • Structured U.S. Treasury and agency debentures, including zero-coupon structures
  • Agency mortgage-backed securities, including pass-throughs and corporate mortgage obligations (CMOs) issued or guaranteed by Ginnie Mae, Fannie Mae, and Freddie Mac
  • Many non-agency rated, mortgage-backed securities
  • Single-family mortgage loans
  • Multi-family mortgage loans
  • Commercial real estate mortgage loans
  • Single-family second mortgage loans and HELOCS
  • Seattle Bank Certificates of Deposit
  • From members who qualify as Community Financial Institutions, agriculture loans, farmland loans, and small business loans

In addition, members having a Blanket Pledge Collateral Arrangement with the Seattle Bank are automatically approved to pledge CMBS, participated loans, and interest-only CRE loans and need only file the appropriate quarterly certification form with the Seattle Bank’s Collateral Review Department to begin pledging these types of collateral. Updated forms are available on our Web site (www.fhlbsea.com). To apply to pledge completed residential construction and subprime loans please contact your Seattle Bank Relationship Manager.

Changes to On-Site Collateral Review Procedures
The Seattle Bank has taken several steps to streamline collateral reviews, including:

  • Reduced the frequency of on-site collateral reviews for the majority of members from annual to once every five years.
  • Eliminated the need for members to engage outside auditors or internal audit staff to complete collateral reviews; all collateral reviews will be conducted by Seattle Bank staff or its contractors.
  • Eliminated all fees to members for collateral reviews.
  • Developed reduced scope and off-site collateral review procedures.
  • Eliminated special application and pre-pledge collateral review requirements for most collateral types.

If a collateral review is necessary, the Seattle Bank will contact you and arrange a time that is most convenient for you.

See the Financial Products and Services User Guide or contact your Seattle Bank Relationship Manager for more information:

John Biestman: 206.340.2473
Debra Davis: 206.340.8663
Charlie Eiseman: 206.340.2359
Jim Mochizuki: 206.340.2345

Dale Jeschke is vice president / credit risk officer with the Seattle Bank.