• December 13, 2021
• Bulletin No: 2021-29

The Federal Home Loan Bank of Dallas (Bank) recently received Regulatory Interpretation 2021-RI-01 (RI) from our regulator, the Federal Housing Finance Agency (FHFA). The RI addresses the eligibility of certain non-lead loan participations pledged to the Federal Home Loan Banks through an affiliate pledging structure. As indicated in the RI (attached), the FHFA has determined that certain participations are viewed as ineligible for collateral pledging. The Bank will no longer accept new pledges of non-lead collateral pledged by an affiliate and will work on a transition of non-lead collateral currently pledged by an affiliate.

In an effort to provide Bank members with adequate time to process and evaluate these changes, we are implementing a gradual and systematic approach which includes a five-year transition period for reducing the eligibility of affected participations pledged as of September 30, 2021. The Bank will contact members currently pledging non-lead participation collateral to determine the Unpaid Principal Balance (UPB) of each member’s non-lead participation collateral pledged by an affiliate as of September 30, 2021 to establish the baseline for the transition period. 

The following schedule outlines the phased approach that will be followed:

November 30, 2022: Unpaid Principal Balance established on September 30, 2021 reduced by 20 percent
November 30, 2023: Unpaid Principal Balance established on September 30, 2021 reduced by an additional 20 percent
November 30, 2024: Unpaid Principal Balance established on September 30, 2021 reduced by an additional 20 percent
November 30, 2025: Unpaid Principal Balance established on September 30, 2021 reduced by an additional 20 percent
November 30, 2026: All remaining participations of this type become ineligible as collateral

We recognize the impact this change may have on your institution and apologize for the challenges this may create for you. Please don’t hesitate to contact your Member Sales representative for any assistance you may need with this transition.

Sincerely,