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Member Collateral Verification Process
FHLB Des Moines performs regulatory-mandated reviews called Member Collateral Verifications (MCVs). The MCV has three primary purposes: to validate the existence of pledged collateral, assess the completeness of loan file documentation and verify that the pledged loan collateral meets FHLB Des Moines eligibility guidelines.
MCV’s are performed on all pledged loan portfolios. Certain loan portfolios are grouped together for sampling aggregation and the results are then applied to each loan portfolio within that group.
Once the schedule is determined, the collateral analyst contacts the member to arrange a mutually agreeable date. The Work Flow Chart (PDF) outlines the MCV process. Members scheduled for an MCV receive an information packet outlining the required information needed prior to the MCV. For questions concerning the MCV information packet, please send an email to MCV_Collateral@fhlbdm.com.
MCV Outcome and Implications for Advance Capacity
Three key evaluations are performed during an MCV that affect a member’s collateral lendable value known as advance equivalent (AE) and those are:
Eligibility Factor (EF)
The proportion of eligible loans in a sample compared with the total loans in a sample.
The EF is applied to the UPB of all loans pledged after the MCV is complete.
Underwriting Assessment (UWA)
The collateral analysts review member underwriting practices against procedural criteria outlined in the Underwriting Assessment Matrix (PDF). The criteria are used to determine the LTV applied to the pledged portfolio.
Loan segregation of the 1-4 Family First Mortgage portfolios are classified into tiers each with their own specific type code
Tier 1 – 1101 (prime loans)
Tier 2 – 1102 (loans with non-traditional characteristics)
Tier 3 – 1103 (loans with subprime characteristics)
Any questions should be sent to: MCV_Collateral@fhlbdm.com.