The Federal Housing Finance Agency is making it easier for Federal Home Loan banks to expand the kinds of collateral they can accept for advances.
Under a final rule issued before the holidays, the agency said it intends to eliminate the need for Home Loan banks to seek regulatory approval to accept new types of advance collateral.
The FHFA has decided that it has approved most kinds of collateral already used by the banks. Therefore, the adoption of approved collateral by another Home Loan bank would "likely not present any material risks" to the Federal Home Loan Bank System.
"The language in the final rule is unqualified, meaning that all types of new collateral are excluded from the term 'new business activity' and thus would not trigger the requirement to file an NBA notice," the agency said in the rule, which was published Dec. 19 in the Federal Register. The final rule goes into effect Jan. 18.
The exemption for advance collateral does not apply to the Home Loan banks' mortgage purchase programs, however. Modifications to an existing mortgage program or product could "present new material risks" to the system and requires submission of a new business activity notice, according to the final rule.
In separate regulation, the FHFA is making it easier for Home Loan banks participating in mortgage purchase programs to transfer mortgage servicing rights to special servicers.
The final "Acquired Mortgage Assets" rule allows the Federal Home Loan banks to transfer mortgage servicing rights to non-Home Loan Bank System members such as servicers Ocwen Financial, Nationstar Mortgage Holdings and Walter Investment Management.
This should relieve small banks and thrifts from servicing Mortgage Partnership Finance and Mortgage Purchase Program loans.
A Home Loan bank that has an "ownership interest in the underlying loans, no matter how small that interest may be" must approve all servicing transfers, the rule said.
In addition, the Home Loan banks must have policies and procedures that ensure the transfer of servicing "would not negatively affect the credit enhancement on the underlying loans or substantially increase the bank's exposure to risk," the FHFA said.
The final Acquired Mortgage Assets rule also goes into effect Jan. 18.