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Collateral Update | PPP Pledging Guidelines and Appraisal Deferrals May 8, 2020

As your cooperative, our goal is to help you continue to serve your community throughout this crisis as efficiently as possible. We’re pleased to announce that we’ve deferred appraisal requirements in line with your regulators and will now be able to accept Small Business Administration (SBA) Paycheck Protection Program (PPP) loans as eligible collateral.

Temporary Deferral of Appraisals
The FDIC, FRB, OCC and NCUA issued interim final rules temporarily amending their appraisal regulations. Completion of appraisals and evaluations required under the agencies’ appraisal regulations may now be deferred for up to 120 days from the date of closing.

The temporary deferrals apply to all residential and commercial real estate secured transactions, including loans for new money or refinancing transactions, but excluding transactions for acquisition, development, and construction of real estate. The deferred appraisals and the interim final rules will sunset on December 31, 2020.

Pledging PPP Loans
Starting May 7, 2020, members will be able to start pledging PPP loans to the FHLBank as eligible collateral. Members with a CAMELS composite rating of “3” or better may pledge up to $5 billion in PPP loans, provided they do not exceed 20% of your total lending value on all pledged collateral.

If you are interested in pledging the new collateral type, please follow this process:

  1. Amend your QCD form to update the weekly total number of PPP loans and total amount of unpaid principal balance within the SBA Guaranteed Loan category.
  2. Complete the Collateral Loan Listing Report – PPP template (available on FHLBank Topeka’s Members Only site under Collateral > Forms) taking care to complete all required fields in the template.

Note: The completed report should be submitted by 9:30 a.m. CT every Thursday to the Financial Services department. Our Member Products and Services Guide has been updated to reflect the appraisal guidelines (see pg. 80) and the PPP loan pledging requirements (see pg. 89).

We hope these changes will accommodate your need for increased collateral flexibility. If you have any questions regarding the pledging process, please contact a member of our Credit team.

Kylie Mergen, Director of Financial Services | 785.478.8203
Elaine Shumaker, Manager of Financial Services | 785.478.8204
Financial Services | 877.933.7803

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Julie DeVader 785.478.8155

FVP, Director of Marketing and Communications

Dan Hess 785.478.8135
SVP, Chief Business Officer

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