New Collateral Type: Interest-Only MF/CRE Loans

last updated on Monday, June 21, 2021 in Business News

FHLB Des Moines has expanded our collateral menu to include acceptance of interest-only (IO) loan collateral for Multi-Family (type code 1110) and Commercial Real Estate (type code 1410) loans.

Details for pledging this new collateral type:

  • Only whole loans are eligible (no participations)
  • Loans must be fully disbursed, Periodic Interest only payments; no revolving line of credit future
  • </= 10 year loan maturity term from original loan date
  • Maximum LTV: 65% - View LTV Chart
  • Loans >/= $5 million for Blanket Advances, Pledge and Security Agreement (APSA) members; all loans for Non-Blanket APSA members
    • Debt Service Coverage Ratio (DSCR) based on the fully amortizing payment supported by actual property net operating income (NOI) not > 18 months from reporting date. Supported by rent roll(s) not more than 13 months from reporting date.
    • Proforma NOI based on executed leases and/or rent rolls that demonstrate a DSCR ≥ 1.0x acceptable for newly originated loans for up to 18 months following first operating calendar year-end. DSCR based on actual NOI required thereafter.
  • The aggregate total of all Commercial Real Estate First Mortgage Interest-Only and Multi-Family First Mortgage Interest-Only loans cannot exceed 30% of a member’s total advance equivalency.  

For Specific or Delivery APSA members, all IO loans must be pre-reviewed and approved by FHLB Des Moines. Members with a Blanket APSA will see a 50% Eligibility Factor applied until an MCV of these type codes is completed.