Enhanced MCV Process

Going forward, every member will have a Member Collateral Verification (MCV) performed on pledged loan collateral every five years. Members with increased risk factors may receive a more frequent visit, but this will be determined on an individual member basis.

This scheduling update is aimed to also help you manage risk and identify any potential issues before a regulatory finding occurs. We understand you may have questions or concerns about this, and we are here to help walk you through these changes.

Expanded Municipal Bond Program Guidelines

We recently updated our municipal bond program requirements to provide you with increased pledging options and flexibility:

• The acceptable municipal bond rating has been lowered from AA to A by one or more NRSRO
• Mortgage revenue bonds (Housing Authority bonds) and Refunding bonds can now be pledged
• The total collateral type categories have been reduced from 8 to 2 (6410: Tax-Exempt and 6420: Taxable)
• Taxable bonds can now be pledged, accompanied by new LTVs:
• Current tax exempt LTV: 91%
• Current taxable LTV: 89%

Please contact us if you have any questions surrounding these changes, or if you'd like additional information. 

Current Status on pledging eNotes to FHLB Des Moines

We currently do not accept eNotes of any loan type. This is not unique to our Bank, but applies to all FHLBanks. We are working as a System to be prepared for the day an operating and liquid secondary market evolves and we can provide a similar level of assurances regarding this collateral as we do our current mortgage loans.  Our commitment to helping you succeed is something we take very seriously. We are committed to finding a resolution to accepting eNotes as eligible collateral. Be on the lookout as we provide more information on our Members Site regarding eNotes.

Please Identify a Backup eAdvantage Administrator ASAP

Our eAdvantage portal is designed to serve as your all-encompassing membership account transaction hub. Due to the utmost importance that eAdvantage plays in your membership with us, we strongly encourage you to identify an additional eAdvantage administrator within your institution. This helps ensure all necessary deadlines are met, and your institution is doubly protected against any bumps in the road.

Loan-to-Values

Annually, FHLB Des Moines makes adjustment to the loan-to-values for advance capacity determination for loans and securities.  For 2017, these annual adjustments will go into effect on October 2, 2017.  FHLB Des Moines will target the first half of the year for LTV adjustments going forward.  Additionally, FHLB Des Moines is making changes in how  loan collateral’s Advance Equivalency are determined via the MCV process.  Look for an announcement on these changes in the coming weeks.

Eligibility Adjustments and Considerations

Commencing October 2, 2017, loans to borrowers in bankruptcy are no longer eligible collateral.  Additionally, Eligibility Checklists are adjusted to clarify that property use complies with all federal, state and local laws and regulations.  For example, loans secured by marijuana dispensaries or related properties are ineligible due to federal law.

Eligibility Reminder – Regulatory Compliance

FHLB Des Moines does not accept any loan as eligible collateral that is in noncompliance with a member’s regulatory requirements.  FHLB Des Moines reviews for certain regulations that directly impact loan underwriting and loan collateral (e.g. flood insurance, ATR compliance, appraisal regulations, etc…).  As a reminder, members pledging loans secured by properties with valuations based on Tax Assessment Valuation or Automated Valuation Models must ensure a documented validation and correlation analysis to market value consistent with the Interagency Appraisal and Evaluation Guidelines Appendix B - Evaluations Based on Analytical Methods or Technological Tools.  Commencing October 2, 2007, Eligibility Checklists are updated for these interagency guideline requirements.