Common Causes of Loan Ineligibility
last updated on Thursday, November 20, 2025 in Member Services
Each year, FHLB Des Moines assesses the causes of loan ineligibility from Member Collateral Verifications (MCVs) in the prior year. From year to year, the primary causes tend to be the same matters, notably:
- Loans pledged using incorrect collateral type codes
- Pledging past due loans
- Pledging ineligible loans
Maximize your collateral position with FHLB Des Moines by working to avoid common causes of loan ineligibility often discovered throughout the MCV process.
Best Practice Recommendations for Common Collateral Coding and Pledging Mistakes
► Pledge 1st lien 1-4 family loans with credit scores ≤ 620 in the subprime type code of 1103
► Pledge pre-approved participation loans in participation-specific type codes
► Choose a collateral type code that accurately aligns with the property type
► Choose a collateral type code that aligns with the lien position listed on the title work. (i.e.: 1st lien position pledged under 1st lien type code)
► Government guaranteed loans must be pledged in the specific government guaranteed type code
► Check delinquency allowance for your collateral type code
► Exclude ineligible loans from pledged collateral including loans from employees, officers, directors, attorneys or agents of your institution or FHLBanks
► Use our eligibility checklists for loans you have pledged to ensure your files meet the Bank's eligibility requirements.
DOWNLOAD BEST PRACTICE GUIDE
Overall, our members do an outstanding job at pledging only eligible loans. Average eligibility on MCVs is about 90%. This high level isn’t surprising; eligibility is rooted in large part by member practice. If your last MCV notes eligibility factors above this level, congrats and well done. If you're below this level, don’t hesitate to reach out. We are always available to help you improve your results and enhance your advance capacity.