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Future Acceptance of eNotes as Collateral within FHLBank System
2020-02-18
Credit and Collateral

The 11 Federal Home Loan Banks (FHLBanks) are developing a solution that will pave the way for our members to pledge eNotes as eligible collateral. As member-owned cooperatives, we recognize and understand the value and benefits that eNotes provide, both to our nearly 6,900 member institutions and to the customers they serve.

The FHLBanks have created Electronic Promissory Notes (eNotes) Model Collateral Acceptance Requirements and Guidelines, a common set of core requirements for accepting eNotes as collateral. These guidelines are based on federal law pertaining to electronic signature transactions, and set forth standards relating to eSignatures, eNote documentation, eClosings, eRegistry requirements, eNote vault requirements, and servicing system requirements. Each FHLBank will need to approve the Electronic Promissory Notes Model Collateral Acceptance Requirements and Guidelines in accordance with their internal approval process.

The FHLBanks have made significant progress in arriving at a Systemwide solution for storage of eNotes, and are in the process of finalizing this important milestone. Once this process is complete, the FHLBanks will be able to set a timetable for providing collateral value. However, since each individual FHLBank has its own systems, processes, and policies regarding collateral, implementation timelines will vary.

At FHLBank Atlanta, we are analyzing and developing internal requirements and processes for future acceptance of eNotes. We currently do not have a definitive timeline for when we will be in a position to start accepting eNotes as collateral, as additional time, resources, and approval by our Board of Directors are necessary. However, the Electronic Promissory Notes Model Collateral Acceptance Requirements and Guidelines can help shareholders understand the fundamentals necessary for originating acceptable eNote mortgage collateral. We will continue to provide updates throughout our development process and our Collateral Relationship Specialists are available any time to answer questions.

For more information about eNotes, please see the below materials, including a webinar, video, and eNotes readiness checklist.

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