Custodial & Collateral Services

FHLB Dallas offers a wide array of custodial and collateral services. We recognize that our strength relies on the strength of our members. Borrowing agreements require members and other eligible borrowers to maintain an amount of qualifying collateral that is sufficient to fully secure all FHLB Dallas extensions of credit. Our thorough collateral services ensure that eligibility for extension of credit is sound and accurate.

Collateral Verifications = Solid Foundation 

The collateral verification review process is overseen by a dedicated team of collateral experts, who partner with members to ensure accuracy and efficiency. 

• A measured approach to determining borrowing capacity

• Conducted for members on blanket collateral status
• Frequency determined by member's blanket lien usage

• Secure, web-based process           

Members can streamline the collateral verification process with these Excel tips on filtering data, formatting dates, and combining data.

Collateral Services

A member’s credit rating and FHLB Dallas' risk analysis determine whether a member may borrow under a blanket lien status or custody status.

Members accorded blanket collateral status may borrow up to a specified percentage of the book value of eligible collateral without specifically listing, segregating, or delivering collateral to FHLB Dallas.

Blanket Lien Status

• The member meets all statutory and regulatory capital standards
• The member is assigned a credit rating of A, B, or C
• The member meets all of FHLB Dallas' credit-underwriting standards

Custody status requires the delivery of qualifying collateral to secure existing or future extensions of credit. This collateral may be eligible loans or securities, or the member may purchase a CD from FHLB Dallas. 

Custody Status

• The member is an Insurance Company, Housing Associate, Community Development Financial Institution (CDFI), or is assigned Custody status at the member's request.
• The member does not meet all statutory or regulatory capital standards.
• The member is assigned a credit rating of D, E, or E*.
• The financial condition or controls of a member are such that FHLB Dallas would be secure only if collateral is in the possession of FHLB Dallas, and its’ interests are fully protected.
• The member otherwise fails to meet FHLB Dallas' underwriting standards for the Blanket Lien.
• Members which have a Specific Loan Collateral Status, who may elect to borrow under a specific collateral-only lien arrangement.

More information on delivering loans is found in Collateral Vault Operations.

 

      

        

Thorough Collateral Verifications

Members with blanket lien status are subject to collateral verification reviews. Collateral reviews establish a member's loan eligibility percentage and document exception rates.

Collateral verifications are conducted as desktop reviews and onsite reviews. The frequency and type of collateral review is based on each member's average daily borrowings that utilize their blanket lien within the previous calendar year. All collateral reviews are conducted by Collateral Services department staff.

• Desktop reviews require member submission of an electronic loan data report through SecureConnect.

• Onsite reviews require member submission of an electronic loan report through SecureConnect, followed by an examination of randomly selected sample loans in an onsite visit.

  

Collateral Verifications

Collateral verification guidelines apply to all FHLB Dallas members on Blanket Lien status. At the end of each calendar year, we identify members who are subject to collateral verifications in the upcoming year.

 

This collateral service is only required in specific circumstances. FHLB Dallas does not require a collateral verification for a member with no Blanket Lien usage during the prior calendar year. Typically, a member will not have Blanket Lien usage during a calendar year because:

The level of collateral verification FHLB Dallas performs for a member in a calendar year is based on the daily average amount of the member’s Blanket Lien usage during the previous calendar year.

Additional Documentation

Additional information related to collateral transactions may be found in the Collateral section in the Products and Services section of the Guides and Forms page of the Resource Center and in Collateral Verifications Helpful Resources below.

• The member had no outstanding advances or other extensions of credit to FHLB Dallas at any time during the calendar year.

• The member was on delivery collateral status and was complying with the requirements of delivery collateral status.

• The member had, at all times during the calendar year, delivered to FHLB Dallas eligible loans, securities, and term deposits with a collateral value that exceeded the member’s outstanding advances and other extensions of credit.

A Two-Phased Approach to Verification

Collateral verification is conducted on two levels — onsite reviews and trial balance reviews.             

• Onsite reviews require an FHLB Dallas representative to visit a member's location to perform a detailed evaluation of eligible collateral.

• A member with Blanket Lien usage during the prior calendar year will be subject to the appropriate collateral verification as outlined in the Member Products and Credit Policy.

Collateral Vault Operations

Collateral Vault Operations enables Blanket and Custody Status members to potentially increase borrowing capacity by pledging loans to FHLB Dallas. A security interest is held on the pledged collateral for the duration of the borrowing period. 

Requirements for pledging collateral are outlined in the Member Products and Credit Policy.

Member borrowing capacity for pledged collateral is updated by comparing the unpaid balance of the loan collateral against the unpaid balance the member has in outstanding obligations to FHLB Dallas. To access the available credit programs,  members' qualifying collateral is stored onsite, or, if applicable, is listed at FHLB Dallas.

To Pledge Collateral

Members who elect to deliver collateral undergo a two-step process in pledging a loan. Members prepare and submit the required loan documentation package to FHLB Dallas for each delivered loan, as well as an electronic file (see Delivered Loans Add Template document) that contains all of the descriptive information of the loans that are being delivered, which is then submitted.

Members who elect to list loans will submit an electronic file (see Listed Loans Add Template document). More detailed information on this process is found in the Loan Pledging Instructions. For complete instructions on adding collateral, please reference the instructions under the "Collateral Add" tab in the Collateral section of SecureConnect.

Update of Pledged Collateral

For loans pledged to the FHLB Dallas Vault to continue with receiving loan value, members are required to submit a monthly update for all loans that have been pledged as collateral.

Beginning each month, an updated list of the member's pledged collateral is available via SecureConnect in the "Collateral Monthly Update" tab. A member's update file is submitted via SecureConnect with current information on each loan prior to the 21^st of each month to prevent a potential loss of value. 

Once FHLB Dallas receives the uploaded monthly update file, detailed reports will be provided that identify the condition of the member's pledged notes in the "Reports" tab of SecureConnect. For complete instructions on updating collateral, please see the instructions on the "Monthly Update" tab in the Collateral section of SecureConnect.

Request for Collateral

To request the release of collateral, members must request a Release of Collateral through SecureConnect. To release the collateral for each loan, the member must have sufficient availability to offset any outstanding obligations. For complete instructions on releasing collateral, please see the instructions under the "Request for Release" tab in the Collateral section of SecureConnect.