The new classes of collateral will provide significant relief if the values for the collateral are set correctly. Agriculture and small business loans present a comparable risk profile to one to four family mortgage loans. Discussion of your bank s experience with agriculture and small business loans will help your FHLBank become more comfortable with this type of lending. The long term viability of the Federal Home Loan Bank System depends upon banks ability to use this new funding mechanism. Without additional sources of collateral, banks will look outside the System to seek funding elsewhere.
ABA can help.
ABA staff has background information and economic data which can help the Federal Home Loan Banks in determining the value of agricultural, small business and other real estate related collateral. E-mail the ABA Webmaster.