As we shared with members in December, we have adjusted our yearly cadence for collateral lending value changes. Pending board approval at our March 24 meeting, we anticipate some notable changes to lending values for certain widely pledged mortgage loan and securities categories.

Lending values expected to decrease:

• Section I. Loans – One-to-four Family Residential Real Property: We expect lending values will decline approximately three to five percent for various mortgage loan types within this category, which include: conventional amortizing mortgages, conventional interest-only mortgages, FHA-insured and VA-guaranteed mortgages and held-for-sale mortgages
• Section II. Securities: We expect lending values will decline approximately one to five percent for Agency residential mortgages pass-through securities, Agency collateralized mortgage obligations and Fixed rate Agency notes and non-structured bonds.
• Section IV. Other Real-Estate Related Collateral: We expect lending values will decline approximately three to six percent for second mortgages on one-to-four family residential real property, home equity lines of credit and residential construction mortgages.

Lending values expected to increase:

• Section IV. Other Real-Estate Related Collateral and Section V. Other Collateral: We expect lending values will increase approximately four to six percent for agriculture real estate, operating loans and equipment loans.

If we believe a member will be in a negative collateral position, we will contact those members prior to implementing the proposed lending value changes. We’ve observed that most members consistently expanded their collateral pledged over the past year by pledging more eligible collateral, so we do not anticipate many members will find themselves in a negative collateral position after these lending value changes. With an anticipated effective date of April 3, 2023, most of these changes will impact members during their reporting of collateral on their 2Q 2023 QCD form (to be filed on or before Aug. 14, 2023). We encourage you to take a closer look as you file your 1Q QCD form (to be filed on or before May 15, 2023) to be prepared for the upcoming changes.

We are also offering our annual collateral webinar series later this month to further explain our collateral process.

March 28-31, 2023 | Collateral Webinar Series | Live at the dates listed below or available on-demand after the sessions complete | Register now.

• Collateral Reporting and Lending Values |  Tuesday, March 28  at 2 p.m. CT
• Collateral Eligibility |  Wednesday, March 29  at 2 p.m. CT
• Collateral Verification |  Thursday, March 30  at 2 p.m. CT
• Collateral Q&A |  Friday, March 31 at 10 a.m. CT

Be on the lookout for an email and web update outlining lending changes following our March 24 board meeting.