- March 26, 2020
- Bulletin No: 2020-07
Collateral Policies Guidance Due to Impact of COVID-19
The Federal Home Loan Bank of Dallas (Bank) is committed to supporting our members through the COVID-19 crisis. We realize that our members and their customers may be experiencing disruptions during this difficult time. In response, the Bank is relaxing its requirements related to loan modifications, forbearance agreements and collateral delivery. The guidance outlined below is effective March 26, and the Bank will issue subsequent guidance alerting members when the guidance is no longer in effect.
This guidance takes into consideration supervisory guidance received from the Bank's regulator, the Federal Housing Finance Agency (FHFA), regarding loan modifications and the banking agencies' Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus.
Loan Modifications
Effective March 26 until further notice, for borrowers impacted by COVID-19, the Bank will accept as eligible collateral loans with modifications or forbearance agreements having digital (e.g., DocuSign, Adobe Sign, etc.) or scanned signatures. Loans acceptable under this guidance include loans which are otherwise eligible as collateral, provided the member has a wet-inked signature on the original promissory note. Please refer to the Digital Signatures section below for more information.
Digital Signatures
Any agreement that is digitally signed pursuant to this guidance must include a clause similar to the following:
"Delivery of a signature page to, or an executed counterpart of, this document by facsimile, email transmission of a scanned image or other electronic means, shall be effective as delivery of an originally executed counterpart."
Delinquent Loans
The FHFA has issued guidance to allow the Federal Home Loan Banks to accept as eligible collateral residential loans from borrowers impacted by COVID-19 that are more than 90 days delinquent, provided the member has agreed to a modification or forbearance with the borrower. In addition, the Bank will accept loans in all other eligible loan categories that are more than 30 days delinquent which have a modification or forbearance agreement. This guidance does not include loans which were determined to be classified as delinquent prior to any modification resulting from COVID-19. Loans classified as substandard or doubtful, even after the modification or forbearance, are also considered ineligible. The Bank will confirm the existence of forbearance plans during the member's next onsite review or when loans are delivered to the Bank. During the onsite review, members must be able to substantiate that a forbearance was offered under the guidance provided in this bulletin. Members delivering collateral to the Bank must continue reporting the next payment due date reflected in their records on a monthly basis. However, members will receive borrowing capacity for loans for which they have submitted a copy of their forbearance plan.
Held for Sale Originations
Currently, the Bank accepts as eligible collateral Held for Sale loans originated within the last 60 days or such other period as approved by the Bank. Effective March 26 until further notice, the Bank is approving the addition of 30 days to the period for which Held for Sale loans may be pledged to the Bank (i.e., loans originated within the last 90 days).
Collateral Delivery
Our team is working diligently to review and assign value to delivered loans. We are aware that many of our members' employees are working remotely and may not have immediate access to loan documents. The Bank is prepared to accept imaged copies of the supporting documentation to perform the loan review, and such documents still must be submitted using a secure protocol. In order to obtain full collateral value, the original promissory note still must be delivered. Please contact Collateral Services for instructions.
For more information or if you have questions regarding the information above, please contact Collateral Services at collateral@fhlb.com or 800.541.0597, Option 2.
Sincerely,
Gustavo Molina
Senior Vice President and Chief Banking Operations Officer