Federal Home Loan Bank of Des Moines
09/13/2024 | Press release | Distributed by Public on 09/13/2024 11:30
Collateral Eligibility Updates Q3-Q4 2024
Collateral Eligibility Updates Q3-Q4 2024
last updated on Friday, September 13, 2024 in Business News
FHLB Des Moines will be updating several collateral eligibility requirements over the next two quarters with the majority of the updates effective September 30, 2024. Many of these updates simplify eligibility requirements or provide improved eligibility for certain collateral types.
Please review the information below before submitting your collateral reporting after September 30.
Collateral Updates Effective September 30, 2024
Subprime Credit Score Threshold Lowered to 620
The subprime definition for conventional, 1-4 family first mortgage term loans and mortgage-backed securities is being updated to reflect a FICO® Score ≤ 620. After September 30, members can benefit from a higher LTV Discount by pledging loans that have a credit score for the primary borrower greater than 620 in type code 1101. Credit scores must be at origination or when the last credit decision was made on the loan.
-
Currently, credit scores ≤ 660 are defined as subprime.
Additionally, loans with credit reports obtained at origination but without credit scores will be simply defined as subprime if the debt-to-income ratio is greater than 43%. Home equity loans and lines of credit and 1-4 family construction loans continue to require a credit score > 660 or as noted in the eligibility checklist.
| Impacted Type Codes | Collateral Type |
| 1101/3101 | Residential 1-4 Family 1st Mortgage Loans |
| 1103/3103 | Residential 1-4 Family 1st Mortgage Loans - Subprime |
| 1106 | Residential 1-4 Family 1st Mortgage Loans - Held-for-Sale |
| 1461 | Retained Participation Residential 1-4 Family 1st Mortgage Loans |
| 1561 | Purchased Participation Residential 1-4 Family 1st Mortgage |
| 6205 | Residential Mortgage Backed Securities |
| 6210 | Residential Mortgage Backed Securities - Subprime |
Real Estate Loans with Preliminary Title Work Now Eligible
Effective for members with a Blanket APSA
Real estate loans originated with preliminary lien verification (title work) will be eligible if the loan documentation includes recorded satisfaction of the prior lien.
- Currently, final title work is required for all non-residential loans and for residential loans with an unpaid principal balance greater than $250,000.
Government Insured Loans
The pledge reporting requirement for government guaranteed loans will be updated to be the loan's unpaid principal balance owned by the pledgor as of the reporting date.
- Current requirement for reporting the unpaid principal balance is to report the government insured unpaid principal balance.
Additionally, eligibility criteria has been simplified to state that the loan must meet all requirements on the applicable agency's program criteria in order to pledge in the government insured collateral type codes. Eligibility checklists are no longer published for these type codes; however, the requirements found in the General Eligibility Checklist still apply.
| Impacted Type Codes | Collateral Type |
| 1203/3203 | VA Guaranteed 1-4 Family 1st Mortgage Loans |
| 1205/3205 | FHA Government Guaranteed 1-4 Family 1st Mortgage Loans |
| 1206 | FSA Government Guaranteed Mortgage Loans |
| 1207 | USDA Government Guaranteed Business Loans |
| 1208 | USDA Rural Housing |
| 1209 | HUD Section 184 Loans |
| 1210 | Indian Loan Guarantee Program Business Loans |
| 1211 | FHA Home Equity Conversion Mortgage |
Loan Terms
Maximum maturity is being updated to 40 years for Home Equity Lines of Credit (HELOC), Agricultural Real Estate and amortizing Community Financial Institution (CFI) collateral type codes.
- Current maximum term is 30 years for these collateral types.
The additional calculation requirements for HELOC loan terms will be eliminated.
CFI non-amortizing collateral requirements will update the maturity to be set at 5 years and will remove the requirement of an annual credit review if the note matures in less than 13 months.
| Impacted Type Codes | Collateral Type |
| 1407 | Agricultural Real Estate 1st Mortgage Loans |
| 1423 | Home Equity Line of Credit Loans (HELOC) 1st Lien Position |
| 1424 | Home Equity Line of Credit Loans (HELOC) 2nd Lien Position |
| 1472 | Retained Participation Agricultural Real Estate 1st Mortgage Loans |
| 1572 | Purchased Participation Agricultural Real Estate 1st Mortgage Loans |
| 1616 | Secured Business Loans |
| 1617 | Secured Agri-Business Loans |
| 1626 | Secured Business Line of Credit Loans |
| 1627 | Secured Agri-Business Line of Credit Loans |
Collateral Updates Effective December 31, 2024
30-Day Maximum Past-Due Eligibility Requirement
Agricultural Real Estate, CFI and non-residential government loans cannot be more than 30-days past due after December 31, 2024.
- Currently, past due loans of 90 days are eligible for the below mentioned collateral types.
| Impacted Type Codes | Collateral Type |
| 1206 | FSA Government Guaranteed Mortgage Loans |
| 1207 | USDA Government Guaranteed Business Loans |
| 1210 | Indian Loan Guarantee Program Business Loans |
| 1407 | Agricultural Real Estate 1st Mortgage Loans |
| 1472 | Retained Participation Agricultural Real Estate 1st Mortgage Loans |
| 1572 | Purchased Participation Agricultural Real Estate 1st Mortgage Loans |
| 1616 | Secured Business Loans |
| 1617 | Secured Agri-Business Loans |
| 1626 | Secured Business Line of Credit Loans |
| 1627 | Secured Agri-Business Line of Credit Loans |
If you have questions, or would like additional information on the updated collateral eligibility requirements, please reach out to your relationship manager, email [email protected] or call 800.544.3452 ex 2500.