Changes to FHLBank Topeka's Member Products Policy

The FHLBank Topeka board of directors, at its September 25, 2008, meeting, approved changes to the Member Products Policy. The changes identified below are effective October 1, 2008. We encourage you to place this memo detailing the policy changes with your hard copy of FHLBank Topeka’s Member Products and Services Guide. The changes will be published to the online version of the Guide by September 30, 2008.

Changes to Letter of Credit Fees – FHLBank will continue to charge 1/8 percent per annum or a minimum of $125 for simple and straightforward letter of credit arrangements, but other letters of credit, specifically those issued to enhance bond issues will be determined on a case-by-case basis. The minimum fee for letters of credit issued to enhance bond issues will be 3/8 percent per annum or a minimum of $500.

Changes to Standby Credit Facility (SCF) Fees – The non-refundable fee charged to issue a SCF has been increased to 0.08 percent per annum or a minimum of $10,000.

Definition of Community Financial Institution (CFI) – The asset cap, which is adjusted annually by the Finance Agency in determining CFI status, has been increased from $625 million to $1 billion.

Prepayment on Amortizing Advance Modified – Partial prepayments will not be allowed on any new amortizing fixed rate advances issued on or after October 1, 2008. Prepayments in full will be permitted as long as FHLBank is informed in writing at least one business day prior to prepayment.

Revisions to Schedule of Eligible Collateral –

1. Agency and Private Issuer MBS/CMOs that are subordinated or junior tranches are considered ineligible collateral.
2. Agency and Private Issuer MBS/CMOs with underlying cash flows that allow for negative amortization are considered eligible collateral, but will be classified as restricted collateral. The aggregate amount of restricted collateral is limited to 25 percent of the institution’s assets.
3. Agency and Private Issuer MBS/CMOs that are support, structured collateral or mezzanine tranches may be considered eligible collateral, but will be reviewed on a case-by-case basis. If accepted as eligible collateral, the security will be classified as restricted collateral. The aggregate amount of restricted collateral is limited to 25 percent of the institution’s assets.
4. One-to-four family residential loans, second mortgages on residential property and private issuer MBS/CMO securities originated after July 10, 2007, must comply with the Interagency Guidance on Nontraditional Mortgage Products Risks, and Addendum to Credit Risk Management Guidance for Home Equity Lending. 

If you have any questions regarding these changes to the Member Products Policy, please contact Sonia Betsworth, Director of Member Products, or Alan Scheef, Credit Administration Officer, at 800.809.2733.