Document:

EXHIBIT 10.1

 Exhibit 10.1 
 ASSIGNMENT NO. 88 OF RECEIVABLES IN ADDITIONAL ACCOUNTS 
 ASSIGNMENT NO. 88 OF RECEIVABLES IN
ADDITIONAL ACCOUNTS, dated as of August 13, 2007 (this “Assignment”), by and between CHASE BANK USA, NATIONAL ASSOCIATION, a national banking association (the “Bank”), and THE BANK OF NEW YORK (DELAWARE), in its capacity as
trustee of the First USA Credit Card Master Trust (the “Trust”) under the Pooling and Servicing Agreement referred to below (in such capacity, the “Trustee”), and acknowledged by the Bank, in its capacity as servicer under the
Pooling and Servicing Agreement referred to below (in such capacity, the “Servicer”). 
 WITNESSETH: 
 WHEREAS, pursuant to Section 2.06(b) of the Second Amended and Restated Pooling and Servicing Agreement, dated as of March 14, 2006, as amended
by the Amendment No. 1 thereto, dated as of August 1, 2007, by and between the Bank, as Transferor and Servicer, and the Trustee (hereinafter, as such agreement may have been, or may from time to time be, amended, supplemented or otherwise
modified, the “Pooling and Servicing Agreement”), the Bank wishes to designate Additional Accounts of the Bank to be included as Accounts and to convey hereby the Receivables of the Additional Accounts to be conveyed by the Bank, whether
now existing or hereafter created, to the Trust as part of the corpus of the Trust (as each such term is defined in the Pooling and Servicing Agreement); and 
 WHEREAS, the Trustee is willing to accept such designation and conveyance subject to the terms and conditions hereof; 
 NOW, THEREFORE, the Bank and the Trustee hereby agree as follows: 
 1. Defined Terms. All terms
defined in the Pooling and Servicing Agreement and used herein shall have such defined meanings when used herein, unless otherwise defined herein. 
 “Addition-Cut Off Date” shall mean, with respect to the Additional Accounts, June 30, 2007. 
 “Addition Date” shall mean, with respect to the Additional Accounts designated on Schedule 1 hereto, August 13, 2007. 
 “Notice Date” shall mean, with respect to the Additional Accounts designated on Schedule 1 hereto, July 30, 2007. 
 2. Designation of Additional Accounts. The Bank shall deliver to the Trustee not later than
five Business Days after the Addition Date, a computer file or microfiche list containing a true and complete list of each VISA® and MasterCard® account, which as of the Addition Date shall be deemed to be an Additional Account, each such account being identified 

 
by account number and by the amount of Receivables in such account as of the close of business on the related Addition Cut-Off Date, which computer file or
microfiche list shall be marked as Schedule 1 to this Assignment and, as of the Addition Date, shall be incorporated into and made a part of this Assignment and the Pooling and Servicing Agreement. 
 (a) The Bank does hereby transfer, assign, set-over and otherwise convey to the Trust for the benefit of the Certificateholders, without recourse on and
after the Addition Date, all right, title and interest of the Bank in and to the Receivables existing as of the Addition Date and thereafter created in the Additional Accounts designated hereby, all monies due or to become due with respect thereto
(including, without limitation, the right to all Recoveries and Collections of Finance Charge Receivables and Principal Receivables), Interchange, all proceeds (including “proceeds” as defined in the UCC as in effect in the State of
Delaware and any other applicable jurisdiction) of such Receivables and Insurance Proceeds relating to such Receivables. The parties hereto intend to treat the foregoing transfer, assignment, set-over and conveyance as a sale, and not as a secured
borrowing, for accounting purposes. 
 (b) The Bank, upon execution hereof, does hereby grant to the Trustee a security interest in all of the
Bank’s right, title and interest in and to the Receivables now existing and hereafter created and arising in connection with the Additional Accounts designated hereby, all monies due or to become due with respect thereto (including, without
limitation, the right to all Recoveries and Collections of Finance Charge Receivables and Principal Receivables), Interchange, all proceeds (including “proceeds” as defined in the UCC as in effect in the applicable jurisdiction) of such
Receivables and Insurance Proceeds relating to such Receivables to secure a loan in an amount equal to the unpaid principal amount of the Investor Certificates issued under the Pooling and Servicing Agreement or to be issued pursuant to the Pooling
and Servicing Agreement and the interest accrued at the related certificate rate. This Assignment constitutes a security agreement under the UCC. 
 (c) The Bank executed, recorded and filed, on September 27, 1999, in the office of the Secretary of State of the State of Delaware, a financing statement naming “First USA Bank, National Association” as debtor and “The
Bank of New York (Delaware), as trustee of First USA Credit Card Master Trust” as secured party, acknowledgment number 9949659, identifying as collateral all Receivables now existing and hereafter created in any Accounts, which financing
statement covers the Receivables now existing and hereafter created in the Additional Accounts listed on Schedule 1 hereto, meeting the requirements of applicable Delaware law and such filing has not been amended or terminated, except in connection
with (i) the financing statement amendment, recorded and filed on October 30, 2002, in the office of the Secretary of State of the State of Delaware, acknowledgment number 22752552, changing the name of the debtor to “Bank One,
Delaware, National Association,” (ii) the financing statement amendment, recorded and filed on September 24, 2004, in the office of the Secretary of State 

 
of the State of Delaware, acknowledgment number 42689752, continuing the term of the financing statement, (iii) the financing statement amendment,
recorded and filed on October 21, 2004, in the office of the Secretary of State of the State of Delaware, acknowledgment number 42967018, changing the name of the debtor to “Chase Manhattan Bank USA, National Association,” and
(iv) the financing statement amendment, recorded and filed on March 16, 2005, in the office of the Secretary of State of the State of Delaware, acknowledgment number 50837402, changing the name of the debtor to “Chase Bank USA,
National Association.” The Bank has delivered a file stamped copy of such financing statement and such financing statement amendments to the Trustee prior to the date of this Assignment. 
 (d) In connection with the conveyance described in Section 2(a) hereof, the Bank further agrees, at its own expense, on or prior to the date
hereof to indicate in its computer files that Receivables created in connection with the Additional Accounts designated hereby have been transferred to the Trust pursuant to this Assignment for the benefit of the Certificateholders. 
 (e) It is the intention of the parties hereto that all transfers of Receivables to the Trust pursuant to this Assignment be subject to, and be treated in
accordance with, the Delaware Act and each of the parties hereto agrees that this Assignment has been entered into by the parties hereto in express reliance upon the Delaware Act. For purposes of complying with the requirements of the Delaware Act,
each of the parties hereto hereby agrees that any property, assets or rights purported to be transferred, in whole or in part, by the Bank pursuant to this Assignment shall be deemed to no longer be the property, assets or rights of the Bank. The
parties hereto acknowledge and agree that each such transfer is occurring in connection with a “securitization transaction” within the meaning of the Delaware Act. 
 3. Acceptance by Trustee. The Trustee hereby acknowledges its acceptance on behalf of the Trust for the benefit of the Certificateholders of all
right, title and interest previously held by the Bank in and to the Receivables in the Additional Accounts now existing and hereafter created, and declares that it shall maintain such right, title and interest, upon the trust herein set forth, for
the benefit of all Certificateholders. 
 4. Representations and Warranties of the Bank. The Bank hereby represents and warrants to
the Trustee on behalf of the Trust as of the Addition Date: 
 (a) Legal, Valid and Binding Obligation. This Assignment constitutes a
legal, valid and binding obligation of the Bank enforceable against the Bank in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect affecting the enforcement of creditors’ rights in general and the rights of creditors of national banks and except as such 

 
enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity). 
 (b) Eligibility of Accounts and Receivables. Each Additional Account designated hereby was, as of the related Addition Cut-Off Date, an Eligible
Account, and each Receivable in such Additional Account was, as of the related Addition Cut-Off Date, an Eligible Receivable. 
 (c)
Selection Procedures. No selection procedures believed by the Bank to be materially adverse to the interests of the Investor Certificateholders were utilized in selecting the Additional Accounts designated hereby from the available Eligible
Accounts in the Bank Portfolio. 
 (d) Insolvency. The Bank is not insolvent and, after giving effect to the conveyance set forth in
Section 2(a) hereof, will not be insolvent. 
 (e) Security Interest. This Assignment constitutes either (i) a valid
transfer and assignment to the Trustee of all right, title and interest of the Bank in and to the Receivables now existing and hereafter created in the Additional Accounts designated on Schedule 1 hereto, and all proceeds (including
“proceeds” as defined in the UCC as in effect in the applicable jurisdiction) of such Receivables and Insurance Proceeds relating thereto and such Receivables and all proceeds thereof will be held by the Trustee free and clear of any Lien
of any Person claiming through or under the Bank or any of its Affiliates, except for (x) Liens permitted under Section 2.05(b) of the Pooling and Servicing Agreement, (y) the interest of the Holder of the Exchangeable Transferor
Certificate and (z) the Bank’s right to receive interest accruing on, and investment earnings in respect of, the Finance Charge Account and the Principal Account, or any Series Account as provided in the Pooling and Servicing Agreement and
any related Supplement, or (ii) (A) a valid transfer for security (under the UCC as in effect in the applicable jurisdiction) of all the Bank’s right, title and interest in such property to the Trustee, which is enforceable with
respect to the existing Receivables of the Additional Accounts designated hereby and the proceeds (as defined in the UCC as in effect in the applicable jurisdiction) thereof and Insurance Proceeds relating thereto upon the conveyance of such
Receivables to the Trustee hereby, and which will be enforceable with respect to the Receivables hereafter created in respect of Additional Accounts designated hereby, the proceeds (as defined in the UCC as in effect in the applicable jurisdiction)
thereof and Insurance Proceeds relating thereto upon such creation, and (B) if this Assignment constitutes a transfer for security to the Trustee in such property upon the grant of the security interest in Section 2(b) hereof with
respect to the existing Receivables of the Additional Accounts, the proceeds (as defined in the UCC as in effect in the applicable jurisdiction) thereof and Insurance Proceeds relating thereto conveyed to the Trustee hereby, and upon the creation of
such Receivables thereafter created in such Additional Accounts, the proceeds (as defined in the UCC as in effect in the applicable jurisdiction) thereof and Insurance Proceeds 

 
relating thereto, the Trustee shall have a first priority perfected security interest (as defined in the UCC as in effect in the applicable jurisdiction) in
such property (subject to the rules governing proceeds set forth in the UCC as in effect in the applicable jurisdiction), except for Liens permitted under Section 2.05(b) of the Pooling and Servicing Agreement. 
 5. Conditions Precedent. The acceptance by the Trustee set forth in Section 3 hereof and the amendment of the Pooling and Servicing
Agreement set forth in Section 6 hereof are each subject to the satisfaction of the conditions set forth in Section 2.06(c) of the Pooling and Servicing Agreement on or prior to the dates specified in Section 2.06(c), to the
extent any such conditions have not been waived. For purposes of Section 2.06(c)(i) of the Pooling and Servicing Agreement, “Notice Date” shall having the meaning specified in Section 1 hereof. 
 6. Amendment of the Pooling and Servicing Agreement. The Pooling and Servicing Agreement is hereby amended to provide that all references therein
to the “Pooling and Servicing Agreement,” to “this Agreement” and “herein” shall be deemed from and after the Addition Date to be a dual reference to the Pooling and Servicing Agreement as supplemented by this
Assignment and all references therein to Additional Accounts shall be deemed to include all accounts listed on Schedule 1 hereto. Except as expressly amended hereby, all of the representations, warranties, terms, covenants and conditions of
the Pooling and Servicing Agreement shall remain unamended and shall continue to be, and shall remain, in full force and effect in accordance with its terms and except as expressly provided herein shall not constitute or be deemed to constitute a
waiver of compliance with or a consent to noncompliance with any term or provision of the Pooling and Servicing Agreement. 
 7.
Counterparts. This Assignment may be executed in two or more counterparts (and by different parties on separate counterparts), each of which shall be an original, but all of which together shall constitute one and the same instrument.

 8. Governing Law. THIS ASSIGNMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE,
WITHOUT REGARD TO ITS CONFLICT OF LAW PROVISIONS. 
 9. Removal Upon Breach. In the event of a breach of any of the warranties set
forth in Section 4(b) hereof other than a breach or event set forth in Section 2.04(d)(i) of the Pooling and Servicing Agreement, if as a result of such breach the related Account becomes a Defaulted Account or the Trust’s
rights in, to or under any Receivable arising in such Account or its proceeds are impaired or the proceeds of such Receivable are not available for any reason to the Trust free and clear of any Lien, then upon the expiration of 60 days (or such
longer period as may be agreed to by the Trustee in its sole discretion, but in no event later than 120 days) from the earlier to occur of the discovery of any such event by either the Transferor or the Servicer, or receipt by the Transferor or the
Servicer of written notice of any such event given by the Trustee, each such Receivable shall be removed from the Trust on the terms and conditions set forth in Section 2.04(d)(iii) of the Pooling and Servicing Agreement as though such
Receivable were removed pursuant to Section 2.04(d)(ii) of the Pooling and Servicing Agreement; provided, however, that no such removal shall be required to be made if, on any day within such applicable 

 
period, such representations and warranties with respect to such Receivable shall then be true and correct in all material respects as if such Receivable had
been created on such day. 

 IN WITNESS WHEREOF, the undersigned have caused this Assignment to be duly executed and delivered by
their respective duly authorized officers on the day and year first above written. 
  

			
	CHASE BANK USA, NATIONAL ASSOCIATION,
as Transferor
		
	By:	 	 /s/ Keith W. Schuck

	Name:	 	Keith W. Schuck
	Title:	 	President
	
	 THE BANK OF NEW YORK (DELAWARE),
 as Trustee
of First USA Credit Card Master Trust

		
	By:	 	 /s/ Kristine K. Gullo

	Name:	 	Kristine K. Gullo
	Title:	 	Vice President

 Acknowledged by: 
  

			
	CHASE BANK USA, NATIONAL
	ASSOCIATION, as Servicer
		
	By:	 	 /s/ Keith W. Schuck

	Name:	 	Keith W. Schuck
	Title:	 	President

 FUSA Credit Card Master Trust 
 Assignment No. 88 of Receivables 

 Schedule l 
 to Assignment No. 88 of 
 Receivables in 
 Additional Accounts 
 ADDITIONAL ACCOUNTS 
 [Delivered to the Trustee]Federal Home Loan Bank of Atlanta Credit and Collateral Policy, as amended

 EXHIBIT 10.1 
 CREDIT AND COLLATERAL POLICY 
 CREDIT
LIMIT 
 The Bank establishes a credit limit for each borrower. The credit limit is referred to in terms of a percentage of the borrower’s
total obligations to the Bank (including the face amount of outstanding letters of credit, the principal amount of outstanding advances and the total exposure of the Bank to the borrower under any derivative contract) to its total assets. Generally,
this limit shall not exceed 50 percent. However, the Credit and Member Services Committee of the Bank’s Board of Directors, or a successor committee or other appropriate committee empowered by the Board of Directors, may approve a higher limit
in its discretion. 
 The Bank determines the credit limit of a borrower, in its sole and absolute discretion, by evaluating a wide variety of factors,
including, but not limited to, the borrower’s overall creditworthiness and collateral management practices. Set forth below, for illustrative purposes only, are typical minimum eligibility requirements for higher credit limits. This list is not
exhaustive, however, and the Bank, in its sole discretion, may impose other requirements in individual cases. 
 Credit limits of 30 percent or less are
generally approved by Bank management in the Credit and Collateral Services department. Credit limits in excess of 30 percent must be approved by the Bank’s Credit and Collateral Committee. In connection with approving a specified credit limit,
the Bank may ask for additional information relating to the borrower, including, but not limited to, its liquidity management policies and alternative funding sources. 
 A borrower’s eligibility for a credit limit in excess of 30 percent is subject to its meeting each of the following requirements: 
  

	 	•	 	 Composite CAMELS rating of 1 or 2 (including an Asset Quality component rating of 1 or 2) 

  

	 	 •
	 	 If CAMELS rating is older than 12 months, LACE® rating of C+
or better 

  

	 	 •
	 	 Satisfactory Collateral Verification Review (CVR)1 in the prior 12 months 

 In addition to the preceding requirements, a borrower’s eligibility
for a credit limit in excess of 40 percent is subject to its meeting each of the following requirements: 
  

	 	•	 	 Ability to provide the Bank with sufficient periodic loan level detail for pledged mortgage collateral 

  

	 	•	 	 Either (i) the borrower has a class of equity registered with the Securities and Exchange Commission (SEC) traded on a national exchange or a rating assigned
to the Borrower by one of the Nationally Recognized Statistical Rating Organizations (NRSROs), (ii) the borrower is a significant subsidiary of a company which meets the requirements of clause (i), or (iii) the borrower agrees to pledge as
collateral to the Bank securities with a Lendable Collateral Value (LCV) equal to the principal amount of all obligations to the Bank that exceeds 40 percent of the borrower’s total assets 

	 1
	 Refer to the Collateral Verification Review section of this Guide for additional
information. 

 Certain borrowers that are part of a larger financial institution and meet the following requirements are eligible for a
credit limit in excess of 50 percent, subject to approval by the Bank’s Credit and Collateral Committee: 
  

	 	•	 	 The borrower is wholly-owned, directly or indirectly, by an entity (Parent) whose primary regulator is the Federal Reserve Board of Governors or the Office of
Thrift Supervision 

  

	 	•	 	 The Parent is registered with the SEC, has a class of equity securities traded on a national exchange, has total assets in excess of $100,000,000,000 and is rated A
(or equivalent) or better by each of the NRSROs 

  

	 	•	 	 The borrower’s current CAMELS rating is 2 or better 

  

	 	•	 	 The borrower has pledged Qualifying Collateral with a Lendable Collateral Value (LCV) equal to the Collateral Maintenance Level that consists entirely of
Residential First Mortgage Collateral, Securities, Bank Deposits or Cash 

  

	 	•	 	 The total obligations of the borrower to the Bank are equal to no more than 20 percent of the total consolidated assets of the Parent 

 

	 	•	 	 The borrower has granted to the Bank a security interest in all of the Residential First Mortgage Collateral owned by the borrower 

  

	 	•	 	 The borrower provides to the Bank at such intervals as required by the Bank such loan level detail with respect to the Residential First Mortgage Collateral as
necessary for the Bank to grant an LCV for such collateral equal to 90 percent of its market value 

  

 2 

 CONVERTIBLE ADVANCE PROGRAM LIMIT 
 The Bank has established a limit on the amount of Convertible advances available to each borrower. Generally,
Convertible advances may not exceed 15 percent of the borrower’s total assets.2 Convertible advances that are no longer subject to conversion are
excluded from the limit. 
 The Bank has established criteria for the consideration of a higher Convertible advances limit, not to exceed 20 percent
of the borrower’s total assets. The Bank shall only consider for this higher Convertible advances limit any borrower that is at or near the 15 percent Convertible advances limit. A borrower that meets the following criteria shall qualify for
consideration for this higher limit, up to a maximum of 20 percent of the borrower’s total assets: 
  

	 	•	 	 Composite CAMELS rating of 1 or 2 

  

	 	•	 	 Core capital (less the net present value of outstanding Convertible advances) greater than 5 percent of total assets 

  

	 	•	 	 Two-quarter return on assets, before extraordinary items, equal to or greater than .80 percent of total assets 

  

	 	•	 	 Non-current assets plus other real estate owned less than 1 percent of total assets 

 In the event the borrower fails to meet one or more of these criteria, the borrower will not be eligible to request additional Convertible advances until the percentage of Convertible advances to total assets is below
15 percent. Additionally, the borrower will have to be re-approved for a Convertible advance limit higher than the Bank’s standard 15 percent limit once it meets the criteria outlined above. 
 PREPAYMENT POLICY 
 Any advance with an
interest rate that is fixed during any period or interval normally shall be subject to a prepayment fee in the event of full or partial repayment of advance principal prior to maturity or the expiration of any interim interest rate period. The
prepayment provisions applicable to each advance shall be set forth in the confirmation for that advance. 
 Adjustable Rate Credit Advances 

 Adjustable Rate Credit (ARC) advances normally shall be subject to a flat fee of 25 basis points per annum. The Bank normally will not assess a prepayment
fee on an ARC advance that is restructured in whole prior to its stated maturity date so long as (a) the stated maturity date of the restructured advance falls on or after the stated maturity date of the original 

	 2
	 CAMELS 3 rated members are subject to a 10 percent of assets limit on Convertible
advances, and CAMELS 4 and 5 rated members may not access Convertible advances. De novo institutions are limited to Convertible advances not in excess of 50 percent of such institution’s credit availability with the Bank.

  

 3 

 advance and (b) the interest rate spread (i.e., the spread to the applicable rate index) on the restructured advance
is equal to or greater than the spread on the original advance. In addition, prior to funding, a borrower may elect to purchase an option to prepay an ARC advance on any interest-reset date without a fee. 
 Fixed Rate Advances 
 Fixed rate advances (other than
Affordable Housing Program (AHP) and Economic Development and Growth Enhancement Program (EDGE) fixed rate advances) normally shall be subject to a non-symmetrical prepayment fee equal to the present value of the daily lost cash flow to the Bank,
based upon the difference between the contract rate on the advance and the rate for a new advance of the same type with the same remaining maturity; discounted at the current offering rate. For advances granted prior to May 23, 1994, the rate
used to calculate the prepayment fee shall be the posted rate on the date of prepayment for advance amounts between $1 million and $4,999,999. If a fixed rate advance was granted on or after May 23, 1994, and it was eligible for cost-based
pricing, the rate used to calculate the prepayment fee shall be the posted rate on the date of prepayment that corresponds to the original advance amount. 
 The minimum prepayment fees for fixed rate advances (other than AHP and EDGE fixed rate advances) shall be as follows: 
  

			
	 1.      If the remaining maturity of the advance is 12 months or less.
	  	The greater of the present value-based fee or 12.5 advance basis points per annum on the prepaid amount.
		
	 2.      If the remaining maturity of the advance exceeds 12 months.
	  	The greater present value-based fee or a flat fee of 25 basis points on the prepaid amount

 The calculation of the prepayment fee for any fixed rate Principal Reducing Credit advances (including those under
AHP and EDGE) shall take into account future scheduled principal reductions. 
 AHP advances granted after January 1, 1998 and EDGE advances granted
before March 25, 2005, shall be subject to a prepayment fee equal to the present value of the daily lost cash flow to the Bank, based upon the difference between the cost of funds originally used to calculate the interest subsidy incorporated
into the advance and the rate for a new unsubsidized fixed rate advance of comparable size with the same remaining maturity, discounted at the current offering rate. For an illustration of how this prepayment fee is calculated, please see Example #
1 below. 
 EDGE advances granted on or after March 25, 2005 shall be subject to a prepayment fee equal to the present value of the daily lost cash flow
to the Bank, based upon the difference between the rate, as of the date of the EDGE advance, for an unsubsidized fixed rate advance of comparable size with the same maturity and the rate, as of the date of prepayment, for a new unsubsidized fixed
rate advance of comparable size with the same remaining maturity, discounted at the current offering rate. For an illustration of how this prepayment fee is calculated, please see Example # 2 below. 
  

 4 

 All prepayment requests received after 11 a.m. (Eastern time) for advances with remaining maturities up to 12 months, or
after 3 p.m. (Eastern time) on the previous business day, for advances with remaining maturities greater than 12 months, may be deferred until the following day. 
 Example #1 
 Assume a borrower obtains a fixed rate AHP advance having the original terms set
forth below: 
  

					
	Date of advance	  	—  	  	June 1, 2005
	Principal amount	  	—  	  	$100,000
	Scheduled maturity	  	—  	  	5 years
	Contract interest rate	  	—  	  	2.00 percent
	Bank’s cost of funds on June 1, 2005	  	—  	  	4.00 percent
	Payment terms	  	—  	  	No amortization prior to maturity, interest payable annually

 If, on June 1, 2009, the borrower were to prepay the entire $100,000 advance in full, and the
Bank’s offering rate as of that date for a new unsubsidized fixed rate advance of comparable size with the same remaining maturity (i.e., one year) were 3.00 percent, then the amount of the prepayment fee would be $985.11, calculated as set
forth below: 
 Lost cash flow = {$100,000 * [0.04 – 0.03]} = $1,000 
 Present value (as of prepayment date) of $1,000 lost cash flow, discounted on a daily basis at an annual rate of 3.00 percent = $985.11 
 Example #2 
 Assume a borrower
obtains a fixed rate EDGE advance having the original terms set forth below: 
  

					
	Date of advance	  	—  	  	June 1, 2005
	Principal amount	  	—  	  	$100,000
	Scheduled maturity	  	—  	  	5 years
	Contract interest rate	  	—  	  	2.00 percent
	Bank’s unsubsidized market rate on June 1, 2005	  	—  	  	4.25 percent
	Payment terms	  	—  	  	No amortization prior to maturity, interest payable annually

  

 5 

 If, on June 1, 2009, the borrower were to prepay the entire $100,000 advance in full, and the
Bank’s offering rate as of that date for a new unsubsidized fixed rate advance of comparable size with the same remaining maturity (i.e., one year) were 3.00 percent, then the amount of the prepayment fee would be $1,231.39, calculated as set
forth below: 
 Lost cash flow {$100,000 * [0.0425-0.03]} = $1,250 
 Present value (as of prepayment date) of $1,250 lost cash flow, discounted on a daily basis at an annual rate of 3.00 percent = $1,231.39 
 Structured Advances with Embedded Options 
 Prepayment fees for
structured advances with embedded options (i.e., Convertible advances) shall be the inverse of the value of any hedging instruments entered into by the Bank in connection with the funding of the advance, as detailed in the confirmation for the
advance. 
 Daily Rate Credit Advances 
 There are
no prepayment fees for Daily Rate Credit advances. 
  

 6 

 CREDIT AND COLLATERAL MATRIX 
 The Credit and Collateral Matrix (Matrix) is one of the tools used by the Bank to implement a risk-focused approach to credit and collateral underwriting and monitoring.
The Bank assigns each borrower a Matrix category according to the relative amount of credit and/or collateral risk such borrower poses to the Bank. A borrower’s Matrix category is the primary factor the Bank uses in determining the
borrower’s eligibility to pledge certain types of eligible collateral and its method of pledging collateral. 
 

 
  

 7 

 COLLATERAL MONITORING AND COMPLIANCE 
 Each borrower is responsible for monitoring its compliance with the Bank’s collateral requirements at all
times. The Bank’s CVR process, discussed in detail below, supplements this responsibility. A borrower must secure all advances (and other Liabilities) with Qualifying Collateral3 at all times. The borrower’s collateral position must be in compliance with the requirements of the Credit and Collateral Policy, prior to the funding of an advance. Accordingly, each borrower should establish
sufficient Qualifying Collateral prior to participating in the Bank’s credit programs. 
 The Bank reserves the right to accept, reject or
ascribe such value to eligible collateral as deemed necessary or appropriate to protect the security interest of the Bank, based upon the borrower’s creditworthiness, the quality of the collateral, or other factors. The Bank must be able to
perfect its security interest in all collateral and shall, as appropriate, file UCC-1 financing statements on collateral pledged to the Bank. 
 COLLATERAL VERIFICATION REVIEWS 
 Periodically, the Bank, or any entity retained by the Bank, will
review the collateral pledged to the Bank to make sure that the collateral reported to the Bank is Qualifying Collateral. The Bank also analyzes the borrower’s documentation and administration processes and controls. The Bank may require such
verification through one or both of the following: 
  

	 	•	 	 On-Site Verification Review (OVR) conducted at the physical premises of the borrower 

  

	 	•	 	 Remote Verification Review (RVR) conducted at centralized locations using copies of documents in the borrower’s files 

 The Bank determines the frequency and type of CVR required for a particular borrower based on its evaluation of various risk factors including, but not limited to:

  

	 	•	 	 The amount of the Bank’s exposure to the borrower 

  

	 	•	 	 Potential concerns regarding the borrower’s credit quality 

  

	 	•	 	 The borrower’s ratio of advances-to-assets 

  

	 	•	 	 The borrower’s prior CVR results 

	 3
	 See Qualifying Collateral section of the Policy.

  

 8 

 EXCEPTION RATES FOR COLLATERAL VERIFICATION
REVIEWS AND EXTRAPOLATION 
 The Bank has established exception rates for CVRs to assist in evaluating and
managing the potential risks that may exist in a borrower’s pledged collateral portfolios. The CVR exception rate is used to determine the frequency of future CVRs, in conjunction with the other factors described above. 
 The relevant loan portfolio for which a borrower is unable to resolve exceptions noted during a CVR will be extrapolated. Through the extrapolation process, the Bank
reduces the amount of a borrower’s eligible collateral based on the exception rate of each loan portfolio reviewed. The Bank considers an exception material if it would hinder the Bank’s ability to either perfect its security interest in
the loan or sell the loan in the event of liquidation. 
 QUALIFYING COLLATERAL 
 The Bank’s Advances and Security Agreement requires each borrower to maintain at all times Qualifying
Collateral that has a Lendable Collateral Value (LCV) at least equal to the Collateral Maintenance Level.4 Qualifying Collateral means collateral eligible
to secure advances and other Liabilities of the borrower to the Bank. The borrower’s capital stock and deposits in a deposit account do not constitute Qualifying Collateral. 
 Qualifying Collateral includes the following types of whole mortgage loans: Residential First Mortgage Collateral, Multifamily Mortgage Collateral, Home Equity Lines of Credit (HELOCs) and Second Mortgage Collateral,
and Commercial Mortgage Collateral. In order for the mortgage collateral to serve as Qualifying Collateral, it must meet each of the following requirements: 
  

	 	•	 	 It has not been identified as held for sale by the borrower (except exclusively to support advances under the Loans Held For Sale program)

  

	 	•	 	 It does not secure an indebtedness on which any director, officer, employee, attorney or agent of the borrower or the Bank is personally liable

  

	 	•	 	 It is not currently past due more than 30 days 

  

	 	•	 	 It has not been classified as substandard, doubtful, or loss by the borrower’s regulator or its management 

  

	 	•	 	 Any individual borrower on any underlying loan collateral is legally authorized to be in the United States 

 A borrower pledging mortgage collateral must maintain, at all times, possession of the original note and a copy of the recorded mortgage for such collateral. Loans may
be held by a third-party custodian subject to terms and conditions acceptable to the Bank, as outlined in the Advances and Security Agreement. 

	 4
	 See Collateral Maintenance Level and Lendable Collateral Value sections. 

  

 9 

 Additionally, any mortgage loan for which any of the legal documents are missing or which demonstrate inconsistencies,
errors or omissions that could impact the credit quality of the collateral, or the Bank’s ability to perfect its security interest in the collateral, may not be included in the pool of Qualifying Collateral. The additional requirements for each
type of mortgage collateral to constitute Qualifying Collateral are set forth below. 
 Residential First Mortgage Collateral 
 Residential First Mortgage Collateral consists of fully-disbursed (not a construction loan or line of credit), whole first mortgages and deeds of trusts, secured by a
first lien on improved one-to-four unit single-family dwellings, including condominiums, planned unit developments (PUDs), town homes and manufactured/mobile homes, so long as such homes are treated as real estate under applicable state law, as
demonstrated by an ALTA Form 7 endorsement to a title insurance policy, an acceptable legal opinion or other evidence acceptable to the Bank. 
 For
Residential First Mortgage Collateral to constitute Qualifying Collateral, it must meet each of the following criteria: 
  

	 	•	 	 The loan is wholly-owned by the borrower and is free and clear of all liens and encumbrances, including any participation interests 

  

	 	•	 	 The loan documents are under the control of the borrower 

  

	 	•	 	 The loan has a signed borrowing resolution if the obligor is a corporation, partnership, limited liability corporation, etc. 

  

	 	•	 	 The current loan-to-value ratio is less than or equal to 100 percent of the value of the underlying real estate collateral, including the value of any other loans
secured by such real estate collateral (Note: To the extent that two or more loans secured by the same underlying collateral exceed the 100 percent loan-to-value ratio, the Bank may accept one or more of such loans as Qualifying Collateral as long
as the accepted loans do not exceed such ratio) 

  

	 	•	 	 The loan collateral is not cross-collateralized with any loan not pledged to the Bank 

  

	 	•	 	 The underlying loan transaction conforms to the requirements of the Bank’s Guidelines to Promote Responsible Lending, as described herein

 Multifamily Mortgage Collateral 
 Multifamily Mortgage Collateral consists of fully disbursed (not a construction loan or line of credit) first mortgage loans, secured by improved residential multifamily (5 or more units) real estate. 
 For Multifamily Mortgage Collateral to constitute Qualifying Collateral, it must meet each of the following criteria: 
  

	 	•	 	 The loan is owned by the borrower and is free and clear of all liens and encumbrances (except for minority, non-controlling participating interests)

  

	 	•	 	 The loan documents are under the control of the borrower 

  

 10 

	 	•	 	 The loan has a signed borrowing resolution if the obligor is a corporation, partnership, limited liability corporation, etc. 

  

	 	•	 	 The loan is not guaranteed by any entity that retains control in the event of default (e.g., Small Business Administration (SBA), United States Department of
Agriculture (USDA), etc.) 

  

	 	•	 	 The loan is not secured by a leasehold interest, unless the ground lease is subordinate to the mortgage, and the remaining lease term is equal to or greater than
the loan term 

  

	 	•	 	 The current loan-to-value ratio is less than or equal to 85 percent of the value of the underlying real estate collateral, including the value of any other loans
secured by such real estate collateral (Note: To the extent that two or more loans secured by the same underlying collateral exceed the 85 percent loan-to-value ratio, the Bank may accept one or more of such loans as Qualifying Collateral as long as
the accepted loans do not exceed such ratio) 

  

	 	•	 	 The loan collateral is not cross-collateralized with any loan not pledged to the Bank 

 Commercial Mortgage Collateral 
 Commercial Mortgage Collateral
consists of fully disbursed (not a construction loan or line of credit) first mortgages, secured by improved office, retail, hotel/motel or industrial/warehouse properties. 
 For Commercial Mortgage Collateral to constitute Qualifying Collateral, it must meet each of the following criteria: 
  

	 	•	 	 The loan is owned by the borrower and is free and clear of all liens and encumbrances (except for minority, non-controlling participation interests)

  

	 	•	 	 The loan documents are under the control of the borrower 

  

	 	•	 	 The loan has a signed borrowing resolution if the obligor is a corporation, partnership, limited liability corporation, etc. 

  

	 	•	 	 The loan is not guaranteed by any entity that retains control in the event of default (e.g., SBA, USDA, etc.) 

  

	 	•	 	 The loan is not secured by a leasehold interest, unless the ground lease is subordinate to the mortgage and the remaining lease term is equal to or greater than the
loan term 

  

	 	•	 	 The current loan-to-value ratio is less than or equal to 85 percent of the value of the underlying real estate collateral, including the value of any other loans
secured by such real estate collateral (Note: To the extent that two or more loans secured by the same underlying collateral exceed the 85 percent loan-to-value ratio, the Bank may accept one or more of such loans as Qualifying Collateral as long as
the accepted loans do not exceed such ratio) 

  

	 	•	 	 The loan collateral is not cross-collateralized with any loan not pledged to the Bank 

  

	 	•	 	 The loan is not secured by a Special Purpose Property, as described in Appendix A. 

  

 11 

 Home Equity Lines of Credit (HELOC) and Second Mortgage Collateral 
 HELOC/Second Mortgage Collateral consists of home equity lines of credit and second mortgages, secured by residential real property on which a 1-4 unit single-family
dwelling is located, including condominiums, PUDs, town homes and manufactured/mobile homes, so long as such homes are treated as real estate under applicable state laws, as demonstrated by an ALTA Form 7 endorsement to a title insurance policy, an
acceptable legal opinion or other evidence acceptable to the Bank. 
 For HELOC/Second Mortgage Collateral to constitute Qualifying Collateral, it must meet
each of the following criteria: 
  

	 	•	 	 The loan is wholly-owned by the borrower and is free and clear of all liens and encumbrances, including any participation interests 

  

	 	•	 	 The loan documents are under the control of the borrower 

  

	 	•	 	 The combined loan balance (first and second mortgage) does not exceed 100 percent of the value of the underlying real estate collateral, including the value of any
other loan secured by such real estate collateral 

  

	 	•	 	 The loan collateral is not cross-collateralized with any loan not pledged to the Bank 

  

	 	•	 	 The loan secures a first or second lien on the underlying real estate collateral 

  

	 	•	 	 The mortgage is to a borrower that is an individual or individuals 

  

	 	•	 	 The underlying loan transaction conforms to the requirements of the Bank’s Guidelines to Promote Responsible Lending, as described herein

 BANK DEPOSIT COLLATERAL OR CASH 
 A borrower’s deposit in the Bank constitutes Qualifying Collateral only if held in a segregated, blocked account pledged to the Bank. Cash held in the
borrower’s deposit account does not constitute Qualifying Collateral. The Bank’s lien on the borrower’s deposit accounts shall not include any monies held in connection with a custodial mortgage account. 
 SECURITIES 
 The following types of securities constitute
Qualifying Collateral. 
 Government and Agency Securities Collateral 
 Treasury (i.e., debt instruments issued by the U.S. Treasury): 
  

	 	•	 	 Treasury Bill – A short-term, discounted government debt instrument with a maturity of one year or less 

  

 12 

	 	•	 	 Treasury Note – A medium-term government debt instrument, issued at par, with a maturity of one to 10 years 

  

	 	•	 	 Treasury Bond – A long-term government debt instrument, issued at par, with a maturity of at least 10 years 

 Agency (i.e., securities issued by certain institutions and government sponsored enterprises (e.g., Fannie Mae, Freddie Mac, FHLBanks, Ginnie Mae): 
  

	 	•	 	 Discount Note – An unsecured general corporate obligation, issued at a discount that has an original term of less than one year 

 

	 	•	 	 Debenture Note or Bond – An unsecured note or bond that has an original term of one year or more 

  

	 	•	 	 Agency Mortgage-Backed Security (MBS) Passthrough – A debt instrument that is collateralized by a pool of residential or multifamily real estate loans. The
mortgage payments of the individual real estate assets are used to pay principal and interest on the bond 

  

	 	•	 	 Agency Collateralized Mortgage Obligation (CMO) or Real Estate Mortgage Investment Conduit (REMIC) – A type of mortgage-backed security that pays a specified
share of the cash flows from an underlying mortgage pool 

  

	 	•	 	 SBA pool – A debt instrument issued by the SBA, a government agency, which is collateralized by SBA-guaranteed loans 

 Private Label Non-Agency MBS 
 Private label non-agency MBS
constitute Qualifying Collateral if they are rated AA (or equivalent) or better. 
 Asset Backed Securities Secured by HELOC/Second Mortgage Loan
Collateral 
 The senior tranche of private label and agency securities backed by home equity loans and lines of credit constitutes Qualifying
Collateral if it is rated AAA (or equivalent) and a market price and prospectus is readily obtainable. 
 INELIGIBLE SECURITIES

 Securities that do not constitute Qualifying Collateral include, but are not limited to: 
  

	 	•	 	 Agency or non-agency security tranche types: 

  

	 	•	 	 Interest Only (IO) 

  

	 	•	 	 Principal Only (PO) 

  

	 	•	 	 Inverse Floaters (INV) 

  

	 	•	 	 Accrual Bonds (Z tranche) 

  

	 	•	 	 Residual 

  

 13 

	 	•	 	 Municipal Bonds (except to the extent such bonds otherwise qualify as MBS) 

  

	 	•	 	 Subordinate or Mezzanine 

  

	 	•	 	 Corporate Bonds 

  

	 	•	 	 Commercial Paper 

  

	 	•	 	 Preferred and Common Stock 

  

	 	•	 	 Any security for which pricing is not readily available to the Bank 

 COLLATERAL MAINTENANCE LEVEL AND LENDABLE COLLATERAL VALUE 
 A borrower must maintain sufficient Qualifying Collateral, when discounted to the LCV, in an amount equal to at least 100 percent of the outstanding amounts of all
advances (and other Liabilities of the borrower to the Bank). This is the Collateral Maintenance Level. The Bank reserves the right to specify such other percentage for any borrower as it may deem necessary in the case of such borrower from time to
time. 
 The Bank assigns an LCV to pledged Qualifying Collateral. This is a discount to its otherwise prescribed value. For each collateral type and
pledging method, the Bank discounts the unpaid principal balance (UPB), market value (MV), or other defined value of the pledged collateral, as determined by the Bank, to calculate the amount that may be borrowed against the pledged collateral (the
LCV). The Bank reserves the right to adjust the discount applied to the pledged collateral for any borrower as it may deem necessary in the case of such borrower from time to time. The current LCVs for Qualifying Collateral are provided below in the
section entitled “Lendable Collateral Value for Qualifying Collateral.” 
 COLLATERAL REPORTING AND
PLEDGE METHODS 
 The Advances and Security Agreement provides for a pledge by the borrower of its entire portfolio of
Residential First Mortgage Collateral, Multifamily Mortgage Collateral, HELOC and Second Mortgage Collateral, and Commercial Mortgage Collateral to secure advances (and other Liabilities) under the Agreement. However, a Matrix 1 or 2 borrower may be
exempted from pledging Multifamily Mortgage Collateral, Commercial Mortgage Collateral and HELOC and Second Mortgage Collateral on a blanket basis, upon request of the borrower. A borrower may be exempted from the requirement to provide a blanket
lien on its Residential First Mortgage Collateral, or it may be permitted to pledge only specific loans within any other mortgage collateral portfolio, only upon specific approval by the Bank. 
 Matrix 1 and 2 Members 
 A Matrix 1 or 2 borrower that has
pledged Residential First Mortgage Collateral pursuant to a blanket lien must submit a Qualifying Collateral Report (QCR) on a quarterly basis within 30 days of each calendar quarter end. The Bank, in its sole discretion, may require more frequent
reporting. 
  

 14 

 The LCV for Residential First Mortgage Collateral pledged pursuant to a blanket lien by a Matrix 1 or 2 borrower shall be
80 percent of the unpaid principal balance of such collateral. 
 The LCV for Residential First Mortgage Collateral pledged pursuant to a blanket lien by a
Matrix 1 or 2 borrower that provides additional loan level detail shall be 90 percent of the market value of such collateral, as determined by the valuation model utilized by the Bank, in its sole discretion. 
 The Bank requires a Matrix 1 or 2 borrower that has been approved to provide a specific pledge of individual loans in its Residential First Mortgage Collateral portfolio
to submit, at a minimum, quarterly status updates for such specifically pledged loan collateral. The Bank shall ascribe an LCV of 85 percent of the market value for such specifically pledged Residential First Mortgage Collateral. 
 Reduced Title Documentation 
 The Bank generally requires that
in order for Residential First Mortgage Collateral to be Qualifying Collateral such collateral must include post-closing lien verification, such as title insurance, title opinion or post-closing title search. To the extent that a Matrix 1 or 2
borrower has not conducted a post-closing lien verification for any Residential First Mortgage Collateral, the Bank, in its discretion, may accept such collateral as Qualifying Collateral, but shall reduce the LCV for such collateral by an
additional ten percent from the otherwise applicable LCV for such collateral. Matrix 3 and 4 borrowers must perform post-closing lien verification for all Residential First Mortgage Collateral in order for such collateral to be Qualifying
Collateral. 
 Matrix 1 or 2 borrowers must specifically identify all Residential First Mortgage Collateral without post-closing lien verification to the
Bank and provide any additional information with respect to such collateral as the Bank may require. Prior to acceptance by the Bank as Qualifying Collateral, and throughout the on-going CVR process, the borrower must perform post-closing title
searches on at least 50 of the loans which did not originally include post-closing title searches. If more than 10 percent of such sample indicates that the lien of the borrower is not first priority, the Bank reserves the right to further reduce
the LCV on such collateral, or to refuse to accept such collateral as Qualifying Collateral. 
 Any Residential First Mortgage Collateral without
post-closing lien verification must contain the following, at a minimum: lien search performed within 45 days of loan closing, borrower affidavit stating no liens exist on the property other than those disclosed in the pre-closing title search; and
payoff statements and evidence satisfactory to the Bank of payment of all liens disclosed in the pre-closing lien search. In addition, the credit score for the purchaser of the real estate associated with such Residential First Mortgage Collateral
must exceed 680 and the loan-to-value ratio for such Residential First Mortgage Collateral must be less than 80 percent. 
  

 15 

 Matrix 3 and 4 Borrowers 
 The Bank considers a borrower falling into Matrix category 3 or 4 less creditworthy. A Matrix 3 or 4 borrower must provide the Bank with a blanket pledge on all types of Qualifying Collateral unless (1) such
borrower has total assets in excess of $250,000,000,000 and (2) the ratio of such borrower’s liabilities to the Bank to such borrower’s total assets does not exceed 10 percent. The Bank, in its discretion, may not require such a
blanket pledge from a Matrix 3 or 4 borrower with at least a CAMELS 3 rating. A Matrix 3 or 4 borrower may also be required to provide increased collateral detail or delivery of collateral, in the sole discretion of the Bank. Any Matrix 1 or 2
borrower that becomes a Matrix 3 or 4 borrower in the future shall become immediately subject to the provisions governing Matrix 3 or 4 borrowers. 
 A
Matrix 3 or 4 borrower must provide a quarterly or monthly QCR within 30 days of each calendar quarter end or month end, as applicable and, in the Bank’s sole discretion, may be required to provide increased collateral detail or deliver
collateral. A borrower with a CAMELS rating of 4 or 5 must deliver its collateral and must provide monthly loan status updates (within the timeframe specified in “Status Reports” below). 
 The LCV for Matrix 3 borrowers pledging Residential First Mortgage Collateral shall be 75 percent of the unpaid principal balance. The LCV for Matrix 4 borrowers
pledging Residential First Mortgage Collateral shall be 67 percent of the unpaid principal balance or lower, in the Bank’s sole discretion. This constitutes an effective Collateral Maintenance Level of 150 percent. 
 Delivery of Physical Collateral Documents 
 The Bank may
require the delivery of pledged mortgage collateral at such times as a borrower falls into Matrix 3 or 4, or such other times as deemed desirable by the Bank. The Bank requires delivery at all times of securities, cash, and participation
certificates pledged to the Bank as collateral. 
 Status Reports 
 A borrower required to specifically identify or deliver collateral must submit to the Bank, at such times as the Bank may request, a status report with respect to the borrower’s collateral, prepared in form and
substance acceptable to the Bank. The status report shall be a written report covering such matters regarding the collateral as the Bank may require, including listings of mortgages and unpaid principal balances thereof, and certifications
concerning the status of payments on mortgages and of taxes and insurance on property securing mortgages. The borrower must submit the status report to the Bank within 30 days of each calendar quarter end or month end, as applicable. 
  

 16 

 COLLATERAL REQUIREMENTS FOR LESS CREDITWORTHY
BORROWERS 
 The Bank reserves the right to manage the credit and collateral requirements for less creditworthy borrowers on a case-by-case
basis, including adjusting the LCV and Collateral Maintenance Level for such borrowers. 
 A borrower is deemed less creditworthy if, in the Bank’s sole
discretion and based on its credit underwriting, the borrower’s financial condition has deteriorated or the borrower’s Matrix category is 3 or 4. 
 The collateral requirements applicable to all CAMELS 4 or 5 rated borrowers, and in the Bank’s sole discretion, other less creditworthy borrowers, are each of the following: 
  

	 	•	 	 The borrower must deliver collateral to the Bank 

  

	 	•	 	 The borrower must provide monthly QCR and loan status updates, and in the Bank’s sole discretion, it may be required to provide increased collateral detail or
deliver collateral 

  

	 	•	 	 The borrower may be required to secure existing advances (and other Liabilities) with Bank deposits and/or eligible government and agency securities

  

	 	•	 	 The borrower may be required to collateralize any existing prepayment fees 

  

	 	•	 	 The borrower must acceptably collateralize the Bank’s potential exposure arising from its use of the Bank’s cash management services

 USE OF OTHER REAL ESTATE RELATED
COLLATERAL TO SECURE ADVANCES 
 The Bank has established a limit on the amount of Other Real
Estate Related Collateral (ORERC) that may be utilized by a borrower for purposes of satisfying a borrower’s Collateral Maintenance Level. That limit is 15 percent of the borrower’s total assets. ORERC includes Commercial Mortgage Loans
and HELOCs and Second Mortgage Loans. Borrowers that meet each of the following eligibility criteria may utilize ORERC as Qualifying Collateral (subject to the above limit): 
  

	 	•	 	 The borrower’s Matrix category is 1 or 2, or, in the Bank’s discretion, has a CAMELS 3 rating 

  

	 	•	 	 The borrower provides a blanket lien on all ORERC, or it receives the Bank’s approval not to provide such a blanket lien 

  

	 	•	 	 To the extent a CVR has not been performed on the ORERC loan portfolio to be utilized, the Bank may impose additional discounts to the LCV for such collateral

  

 17 

 LENDABLE COLLATERAL VALUE FOR QUALIFYING
COLLATERAL 
 The following charts outline the LCV for specific types of Qualifying Collateral: 
  

							
	 Cash
	  	Pledging
Method	  	 LCV
 %
	  	 Comments

	 Cash
	  	Delivery	  	100	  	
				
	 Government and Agency Securities Collateral*
	  	Pledging
Method	  	 LCV
 % MV
	  	 Comments

	 U.S. Treasury bills, notes, bonds
 FHLBank bonds and discount notes
 Fannie Mae bonds and notes
 Fannie Mae mortgage-backed securities
 Freddie Mac participation
certificates
 Freddie Mac bonds and notes
 Ginnie Mae pass-through securities
 Ginnie Mae bonds and notes
	  	Delivery	  	97	  	Pricing must be available from the Bank’s pricing service.
				
	 Agency CMOs and REMICs
	  	Delivery	  	97	  	
				
	 SBA Trust Certificates
	  	Delivery	  	97	  	Subject to Bank’s acceptance.
				
	 Other Securities Collateral*
	  	Pledging
Method	  	 LCV
 % MV
	  	 Comments

	 Private-Label mortgage-backed securities
	  	Delivery	  	90	  	Must be rated AA (or equivalent) or higher by S&P, Moody’s or Fitch. Not all are eligible
				
	 Private-Label CMOs and REMICs
	  	Delivery	  	90	  	Pricing must be available from the Bank’s pricing service. Not all are eligible
				
	 HELOC/Second Mortgage-backed Securities
	  	Delivery	  	90	  	Must be rated AAA (or equivalent) or higher by S&P, Moody’s or Fitch. Pricing must be available from the Bank’s pricing service. Not all eligible.

  

	*	Derivatives or stripped mortgage-backed securities are not considered eligible collateral. 

  

 18 

									
	 First Mortgage Collateral
	  	Matrix
Category	  	 Pledging Method
	  	 LCV**
 %
	  	Comments
					
	 Residential First Mortgage Collateral
	  	1, 2	  	Blanket	  	80 of UPB	  	
					
		  	1, 2	  	Blanket with loan level detail	  	90 of MV	  	
					
		  	1, 2	  	Specific	  	85 of MV	  	
					
		  	3	  	Blanket	  	75 of UPB	  	
					
		  	4	  	Blanket	  	67 of UPB	  	
					
	 Multifamily Mortgage Collateral (five or more units)
	  	All	  	Blanket	  	50 of UPB	  	

  

	**	The LCV may be expressed as an “overcollateralization” requirement (i.e., 150 percent in the case of a Matrix 4 borrower) and may be lower for particular borrowers in the
Bank’s sole discretion. 

  

									
	 Other Real Estate Related Collateral
	  	Matrix
Category	  	Pledging
Method	  	 LCV
 % UPB
	  	 Comments

					
	 Home Equity Lines of Credit and Second Mortgage Collateral
	  	1, 2	  	Blanket	  	50	  	
					
		  	3, 4	  	Not eligible to pledge
	  		  	
					
	 Commercial Mortgage Collateral
	  	1, 2	  	Blanket	  	50	  	Property type eligibility is subject to Bank’s acceptance.
		  	  
 3, 4
	  	  
 Not eligible
 to pledge
	  		  

 AFFILIATE COLLATERAL POLICY 
 An affiliate of a borrower may pledge collateral on behalf of the borrower, provided that the borrower, affiliate and any intermediate holding company have executed an
Affiliate Joinder Agreement satisfactory to the Bank. The Bank may accept an affiliate’s pledge of collateral under this policy subject to each of the following conditions: 
  

	 	•	 	 The borrower’s Matrix category is 1 or 2 or, in the Bank’s discretion, has a CAMELS 3 rating 

  

	 	•	 	 The affiliate is 100 percent owned directly or indirectly by the borrower (Note: In the event the affiliate is a REIT, the borrower may sell non-voting stock in the
affiliate to other investors in an amount acceptable to the Bank, so that the affiliate structure meets the requirements of a REIT) 

  

	 	•	 	 The affiliate has no outside debt or other liabilities for borrowed money 

  

	 	•	 	 The affiliate collateral was previously owned by the borrower and pledged to the Bank prior to being transferred to the affiliate, or such affiliate collateral is
purchased with the proceeds of sales of collateral originally meeting the requirements of the first clause in this bullet point 

  

 19 

	 	•	 	 The borrower and the affiliate comply with the Bank’s documentation and other requirements 

 COLLATERAL REQUIREMENTS FOR INSURANCE COMPANIES AND DE
NOVO INSTITUTIONS 
 Insurance Companies 
 Insurance companies borrowing from the Bank are subject to each of the following additional requirements: 
  

	 	•	 	 Only Residential First Mortgage Collateral and securities are permitted as Qualifying Collateral 

  

	 	•	 	 Securities pledged as Qualifying Collateral shall be subject to a lower LCV than that applied to securities pledged by other borrowers 

Insurance companies may enter into pledged account agreements to perfect the Bank’s security interest in securities collateral. 
 De Novo Institutions 
 A de novo institution is one that has
been in operation for less than two years and does not meet the other requirements summarized later in this section. A de novo institution may apply for advances from the Bank subject to each of the following conditions: 
  

	 	•	 	 It must execute a blanket lien on all types of permitted mortgage collateral 

  

	 	•	 	 Advances may not exceed 20 percent of the borrower’s total assets 

  

	 	•	 	 Advances secured by ORERC may not exceed 10 percent of the borrower’s total assets 

  

	 	•	 	 It must provide a quarterly or monthly QCR, and in the Bank’s sole discretion, it may be required to provide increased collateral detail or to deliver
collateral 

  

	 	•	 	 A de novo borrower with a CAMELS rating of 4 or 5 must provide monthly loan status updates 

  

 20 

 An institution is no longer considered to be de novo once it has met all of the following conditions: 
  

	 	•	 	 It has a CAMELS rating of 1 or 2 

  

	 	•	 	 It has been profitable in four of the past six operating quarters 

  

	 	•	 	 Its reserves/non-performing loans are greater than 60 percent in four of the past six operating quarters 

  

	 	•	 	 Its non-performing loans/total loans are less than 5 percent in four of the past six operating quarters 

 COLLATERAL REQUIREMENTS FOR THE LOANS HELD FOR
SALE PROGRAM 
 Generally, to be eligible to participate in the Loans Held For Sale (LHFS) program, each of the following
conditions must be met: 
  

	•	 	 The borrower’s Matrix category is 1 or 2. Matrix 3 and de novo borrowers may be approved by the Bank, at its discretion. CAMELS 4 or 5 rated borrowers may not
access the LHFS program 

  

	•	 	 The borrower must have satisfactory prior CVR results 

  

	•	 	 The borrower must have executed the Bank’s Advances and Security Agreement and must not have opted-out of the blanket lien on its Residential First Mortgage
Collateral 

  

	•	 	 All potential purchasers (investors) of the collateral eligible to support LHFS advances must enter into a tri-party agreement with the Bank and the borrower
governing the status of the Bank’s security interest in the collateral, the sale of the collateral and the disposition of the proceeds of such sales, or establish a custodial arrangement. No sales of collateral supporting LHFS advances shall be
made to any party who has not executed such a tri-party agreement 

  

	•	 	 The borrower’s investors must be acceptable to the Bank 

 LCV and Eligibility Criteria 
 The LCV for collateral under the program shall not exceed 80 percent of the UPB of the eligible
collateral reported to secure such advances. 
 Loans must meet the following criteria to be eligible to support LHFS advances: 
  

	•	 	 Loans must be fully-disbursed, wholly-owned first mortgage loans secured by a first lien on improved one-to-four unit single family dwellings, including primary
residences, second homes and investment properties 

  

	•	 	 Loans must be underwritten to the guidelines of the borrower’s investor(s) 

  

	•	 	 Loans must be appropriately identified as being held for sale in the borrower’s periodic financial regulatory reporting 

  

 21 

 Ineligible Collateral 
 The following Collateral is not eligible to secure LHFS advances: 
  

	•	 	 Loans reported to the Bank to support any prior LHFS advances, even if such prior LHFS advances are paid off within 90 days 

  

	•	 	 Loans pledged for a period greater than 90 days 

  

	•	 	 Loans that are not fully disbursed 

  

	•	 	 Revolving lines of credit 

  

	•	 	 Loans with a loan-to-value ratio greater than 100 percent, based on the lesser of the purchase price or appraised value 

  

	•	 	 Participation interests in any loan, or loans in which participation interests have been sold 

  

	•	 	 Loans past due more than 30 days, or adversely classified loans 

  

	•	 	 Loans pledged to secure any other borrowings 

  

	•	 	 Loans to any director, officer, any employee, attorney or agent of the borrower or the Bank, or loans held in a third party subsidiary 

 

	•	 	 Loans with document deficiencies, such as lack of an original note or copy of a recorded mortgage instrument 

  

	•	 	 Loans that do not conform to the requirements of the Bank’s Guidelines to Promote Responsible Lending, as described in the policy 

 

	•	 	 Loans secured by mobile or manufactured homes that do not constitute real property under state law 

  

	•	 	 Loans not meeting any other requirement to be Qualifying Collateral 

 Monitoring/Periodic Review 
  

	•	 	 The Bank, in its sole discretion, may conduct periodic CVRs relating to the LHFS program, with or without notice. The Bank will conduct quarterly internal
compliance reviews to value the pledged LHFS collateral. The Bank may, in its sole discretion, discontinue a borrower’s participation in the LHFS program at any time. 

 COLLATERAL REQUIREMENTS FOR DERIVATIVE CONTRACTS 
 Members must collateralize the exposure to the Bank under any derivative contract when the Bank is the buyer of an interest rate cap or floor. The required collateral
must have an LCV equal to not less than 0.5 percent of the notional principal amount of the contract, plus the net exposure to the Bank under the cap or floor. The Bank does not require collateral when the Bank is the seller of an interest rate cap
or floor. The member must enter into an ISDA master agreement and schedule with the Bank. 
  

 22 

 Interest rate swap exposure is included in the calculation of the overall credit limit and must be fully collateralized
as outlined below. 
  

	 	•	 	 For maturities less than one year: Market value of swap + 0 percent of notional principal of the swap 

  

	 	•	 	 For maturities between one and less than five year(s): Market value of swap + .5 percent of the notional principal of the swap 

  

	 	•	 	 For maturities greater than five years: Market value of swap + 1.5 percent of the notional principal of the swap 

 Under certain conditions, the Bank may permit a borrower to enter into an uncollateralized interest rate swap transaction. 
 LESS CREDITWORTHY, CAPITAL DEFICIENT OR INSOLVENT BORROWERS

 Watch List 
 The Bank uses a “Watch
List” to identify and monitor those borrowers that the Bank considers as less creditworthy, or are capital deficient or insolvent. The Bank uses the following criteria to determine whether a borrower should be placed on the Watch List:

  

	 	•	 	 CAMELS rating of 3 or worse; 

  

	 	 •
	 	 LACE® rating of C or worse; 

  

	 	•	 	 Credit Score of 50 or less; 

  

	 	•	 	 TheStreet.com Ratings rating of D or worse; or 

  

	 	•	 	 The borrower is capital deficient, insolvent or otherwise in troubled financial condition, as determined by the Bank 

 The Bank may exclude a borrower that would otherwise meet the criteria for inclusion on the Watch List, in its discretion, due to factors not addressed by the criteria
above. Alternatively, the Bank may include borrowers on the Watch List that do not meet any of the above criteria, if, in the Bank’s discretion, such additional monitoring and oversight is prudent and advisable. 
 Advances to Less Creditworthy, Capital Deficient and Insolvent Borrowers 
 The Bank, in its sole discretion, may grant new advances to a less creditworthy borrower. Generally, however, the Bank shall grant new advances, if any, to a less creditworthy borrower subject to each of the following
conditions (and any other conditions the Bank may impose in the future): 
  

	 	•	 	 The term of the advances shall not exceed 12 months 

  

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	 	•	 	 Qualifying Collateral must consist of Bank deposits or eligible government and agency securities 

  

	 	•	 	 The Bank, in its sole discretion, shall determine the market value of the Qualifying Collateral 

 The Bank, in its sole discretion, may grant new advances to a borrower that has failed one or more of its regulatory capital requirements (capital deficient borrowers),
provided the borrower remains solvent on a tangible capital basis. However, the Bank shall honor a written request from such borrower’s primary federal regulator or insurer to limit or eliminate access to advances. If a borrower’s core
capital to assets ratio is 3 percent or less, outstanding letters of credit must be collateralized by a cash deposit or government or agency securities until the letters of credit expire or are surrendered to the Bank by the beneficiary for
cancellation. 
 The Bank shall not grant new advances to a tangibly insolvent borrower unless the borrower’s primary federal regulator or insurer
submits a written request that the Bank make such advances, and the Bank, in its sole discretion, elects to grant such advances. 
 The Bank, in its sole
discretion, may renew advances to a tangibly insolvent borrower for a term of up to 30 days. However, the Bank shall honor a written request from such borrower’s primary federal regulator or insurer not to renew such advances. The Bank, in its
sole discretion, may renew outstanding advances to a tangibly insolvent borrower for a term greater than 30 days at the written request of the primary federal regulator or insurer. 
 NON-BORROWER USERS OF BANK SERVICES 
 If a non-borrower member or housing associate utilizes any Bank product or service that could result in a Liability to the Bank (including, without limitation, standby letters of credit, mortgage purchases, cash management services other
than wire transfers, safekeeping, and Affordable Housing Program subsidies) (Covered Services), then such member or housing associate must (a) execute an Advances and Security Agreement, (b) submit a QCR to the Bank on a quarterly basis
for each mortgage portfolio pledged, and (c) maintain at all times Qualifying Collateral that has an LCV at least equal to the Collateral Maintenance Level, in each case in accordance with the requirements for borrowers. The requirements set
forth in the immediately preceding sentence shall not apply to a member or housing associate that (i) only holds Bank capital stock and/or maintains a balance in its Daily Investment Account at the Bank and (ii) does not engage in any of
the Covered Services. 
 FEES 
 The Bank may
assess reasonable fees and charges to cover the Bank’s costs, including overhead, relating to the receipt, holding, redelivery and reassignment of the borrower’s collateral, as required by the Bank. The Bank publishes a schedules of such
fees and charges on the Bank’s website from time to time. In addition, the Bank also may assess fees to cover all expenses incurred in connection with lien perfection. 
  

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 The Bank may charge a borrower for the Bank’s outside legal counsel fees, costs and expenses when the Bank assists
the borrower with a transaction that primarily benefits that borrower. Such transactions include, but are not limited to, the following: affiliate pledge arrangements, intercreditor agreements, subordination agreements, letters of credit (including
issuance, amendment, transfer and cancellation), custody arrangements, mergers and assumptions of borrower obligations, and transactions that require or potentially require involvement on the part of the Finance Board, such as new business activity
requests, regulatory interpretations, waivers or other action. The Bank, in its sole discretion, shall determine whether the services of outside counsel are required with respect to a particular transaction. The amount charged to the borrower shall
be based on actual outside counsel legal fees, costs and expenses related to the matter. The borrower shall be responsible for such charges regardless of whether the transaction ultimately is concluded. 
 GUIDELINES TO PROMOTE RESPONSIBLE LENDING 
 The Bank, as part of its housing finance mission, supports the expansion of fair and equitable home ownership opportunities. To discourage predatory lending practices,
which are inconsistent with such opportunities, the Bank has established the following anti-predatory lending policy, the Guidelines to Promote Responsible Lending (“Guidelines”), with respect to Residential First Mortgage Collateral, Home
Equity Lines of Credit (HELOC) and Second Mortgage Collateral, as well as securities backed by Residential First Mortgage Collateral, HELOCs and Second Mortgage Collateral pledged to the Bank as collateral (“Residential Mortgage
Collateral”). This policy is intended to underscore the Bank’s support of fair and ethical lending practice. 
 The Bank requires that all
Residential Mortgage Collateral comply with all applicable federal, state and local anti-predatory lending laws and other similar credit-related consumer protection laws designed to prevent or regulate abusive and deceptive lending practices and
loan terms, and all rules, regulations, orders and guidance promulgated by any Federal, State or local regulatory agency in connection with such laws (collectively, “Anti-Predatory Lending Laws”). 
 In addition, Residential Mortgage Collateral shall not contain the following characteristics or provisions: 
  

	 	•	 	 The annual percentage rate on the loan or points and fees charged for the loan exceed the thresholds of the Home Ownership and Equity Protection Act of 1994 and its
implementing regulations (Federal Reserve Board Regulation Z), if such loan was originated after the effective date of HOEPA and its implementing regulations. 

  

	 	•	 	 The loan includes prepaid, single-premium credit insurance. 

  

 25 

	 	•	 	 The loan includes a fee or charge for prepayment beyond the first five years. 

  

	 	•	 	 The loan requires mandatory arbitration to resolve disputes, but only to the extent that such requirement is prohibited or limited by applicable Anti-Predatory
Lending Laws. 

 Any Residential Mortgage Collateral that does not comply with the above requirements will not constitute Qualifying
Collateral. Each pledgor is responsible for complying with these Guidelines, regardless of whether the pledgor originates or purchases the Residential Mortgage Collateral. 
 Under the terms and conditions of the Advances and Security Agreement, each pledgor has agreed that it will: (1) comply at all times with the Bank’s Credit and Collateral Policy, including these Guidelines;
(2) comply at all times with the requirements of all applicable Anti-Predatory Lending Laws; (3) maintain Qualifying Collateral with an LCV at least equal to the Collateral Maintenance Level required by the Bank, and substitute Qualifying
Collateral, if necessary, for any Residential Mortgage Collateral that does not comply with these Guidelines; and (4) indemnify, defend and hold the Bank harmless from and against any liability, loss, cost or expense (including reasonable
attorneys’ fees and expenses) that result from such pledgor’s violation of these Guidelines. 
 The Bank will adopt procedures to monitor for
compliance with this Policy through: 
  

	 	•	 	 The verification that all pledgors have executed an Advances Agreement; 

  

	 	•	 	 The review of loan documentation as part of collateral verification reviews; 

  

	 	•	 	 The monitoring of regulatory alerts for newly issued public enforcement actions pertaining to HOEPA, Regulation Z, and anti-predatory lending violations; and

  

	 	•	 	 The requirement, at the Bank’s discretion, that pledgors provide evidence reasonably satisfactory to the Bank that Residential Mortgage Collateral does not
violate applicable Anti-Predatory Lending Laws. 

 With respect to Residential Mortgage Collateral purchased by the pledgor, the pledgor is
responsible for conducting due diligence that it deems sufficient to support its obligations to the Bank. For mortgage-backed securities, the Bank will rely on the member’s (or member’s pledging subsidiary or affiliate) executed
representation and warranty certifications as the key indicator of compliance. 
 If abusive lending issues are identified by the pledgor’s regulator,
or if the Bank identifies noncompliance with these Guidelines, then the Bank may, in addition to all available rights and remedies it has at law or in equity, (1) require the pledgor to substitute Qualifying Collateral for such Residential
Mortgage Collateral; (2) assign an LCV of zero to such Residential Mortgage Collateral; and (3) require the pledgor to undertake a review of its policies, practices, and procedures for complying with the Bank’s Credit and Collateral
Policy, practices and procedures. 
  

 26 

 The foregoing policy addresses assets pledged to the Bank as
collateral. Residential mortgage loans purchased or acquired by the Bank from members under the Mortgage Partnership Finance® (“MPF”) Program will be governed by the terms set
forth in the MPF Origination Guide, and residential mortgage loans purchased or acquired under the Mortgage Purchase Program (“MPP”) will be governed by the terms set forth in the MPP Guide. 
 GUIDELINES FOR SUBPRIME AND NONTRADITIONAL LOANS 
 As part of its housing finance mission, the Bank supports the expansion of fair and equitable homeownership opportunities, including the use of subprime and
nontraditional mortgage loan products, as appropriate. However, as a part of the Bank’s risk management programs, the Bank must measure, monitor and manage credit risk posed by the purchase of subprime and nontraditional loans or
mortgage-backed securities, and through advances secured by subprime and nontraditional Residential First Mortgage Collateral, Home Equity Lines of Credit (HELOC) and Second Mortgage Collateral, as well as securities backed by subprime and
nontraditional Residential First Mortgage Collateral, HELOCs and Second Mortgage Collateral pledged to the Bank as collateral (“Residential Mortgage Collateral”). 
 Definition of Subprime Residential Mortgage Loans 
 The term “subprime” refers to the credit
characteristics of individual borrowers. Subprime borrowers typically have weakened credit histories that include payment delinquencies and possibly more severe problems such as charge-offs, judgments, and bankruptcies. They also may display reduced
repayment capacity as measured by credit scores, debt-to-income ratios, or other criteria that may encompass borrowers with incomplete credit histories. For purposes of this policy, subprime residential mortgage loans are loans to borrowers
displaying one or more of these characteristics at the time of origination or purchase. Such loans may have a higher risk of default than prime loans. Generally, subprime borrowers will display a range of credit risk characteristics that may include
one or more of the following, each of which is considered only at the time of origination of a new loan: 
  

	 	•	 	 Two or more 30-day delinquencies in the last 12 months, or one or more 60-day delinquencies in the last 24 months, for a prior mortgage as evidenced by a credit
report; 

  

	 	•	 	 Judgment, foreclosure, repossession, or charge-off in the prior 24 months; 

  

	 	•	 	 Bankruptcy in the last five years; 

  

	 	•	 	 Relatively high default probability as evidenced by, for example, a credit bureau risk score (FICO) of 660 or below (depending on the product/collateral), or other
bureau or proprietary scores with an equivalent default probability likelihood; and/or 

  

	 	•	 	 Debt service-to-income ratio of 50% or greater, or otherwise limited ability to cover family living expenses after deducting total monthly debt-service requirements
from monthly income. 

  

 27 

 This list is illustrative rather than exhaustive, and is not meant to define specific parameters with respect to subprime
borrowers or subprime residential mortgage loans. 
 Subprime mortgage loans may be made through special loan underwriting programs, through unique
subsidiaries, identified in distinct ledger accounts or as stratified in a loan servicing system. This policy shall not apply to subprime loans originated and managed, in the ordinary course of business, as exceptions to prime risk selection
standards where mitigating circumstances justify the decision to extend credit. In addition, subprime residential mortgage loans do not include loans made to customers with temporary or minor credit problems, or those loans made under a government
(e.g., FHA/VA) or affordable housing program. Securities issued by Government Sponsored Enterprises shall be exempt from this definition. 
 Definition
of Nontraditional Residential Mortgage Loans 
 Nontraditional residential mortgage loans, for purposes of this policy, are defined as mortgages that
allow borrowers to defer payment of principal or interest, with the exception of HELOCs. Examples of nontraditional residential mortgage loans include interest-only mortgages, payment-option mortgages, or negative amortization mortgages. Securities
issued by Government Sponsored Enterprises shall be exempt from this definition. 
 Bank Monitoring of Subprime and Nontraditional Mortgage Loans

 Under the terms and conditions of the Advances and Security Agreement, each pledgor has agreed that it will: (1) comply at all times with the
Bank’s Credit and Collateral Policy; (2) comply at all times with the requirements of all applicable laws and regulations regarding subprime and nontraditional mortgage loans; (3) maintain Qualifying Collateral with an LCV at least
equal to the Collateral Maintenance Level required by the Bank, and substitute Qualifying Collateral, if necessary, for any Residential First Mortgage Collateral or Second Mortgage Collateral that does not comply with the Bank’s requirements;
and (4) indemnify, defend and hold the Bank harmless from and against any liability, loss, cost or expense (including reasonable attorneys’ fees and expenses) that result from such pledgor’s violation of the Bank’s requirements.

 The Bank will adopt procedures to monitor compliance with this policy through: 
  

	 	•	 	 The verification that all pledgors have executed an Advances Agreement; 

  

	 	•	 	 The review of loan documentation as part of CVRs; 

  

	 	•	 	 The monitoring of regulatory alerts for newly-issued public enforcement actions pertaining to subprime and nontraditional mortgage lending activities;

  

	 	•	 	 The requirement that pledgors provide periodic confirmation to the Bank that Residential Mortgage Collateral does not violate applicable laws and regulations
regarding subprime and nontraditional mortgage loans; and 

  

	 	•	 	 The requirement that pledgors subject to federal or state regulatory oversight provide periodic confirmation to the Bank that such pledgors are complying with
applicable nontraditional residential and subprime mortgage lending guidance. 

  

 28 

 With respect to Residential Mortgage Collateral purchased by the pledgor, the pledgor is responsible for conducting due
diligence that it deems sufficient to support its obligations to the Bank. 
 CREDIT AND COLLATERAL
POLICY FOR HOUSING ASSOCIATES 
 The Bank has established a specific credit and collateral policy
for housing associates that qualify as State Housing Finance Agencies (SHFAs). Through this policy, the Bank provides a range of credit products to qualified SHFAs. To the extent there is a conflict between this section of the Credit and Collateral
Policy and any other section of the Credit and Collateral Policy, as applied to housing associates, this section shall prevail. 
 The Bank shall grant
advances to a housing associate qualifying as an SHFA in accordance with the Act, the Regulations, and the Credit and Collateral Policy currently in place for members. 
 An SHFA must be prequalified, prior to the funding of an advance request, to determine suitability with respect to the Bank’s credit standards. 
 The Bank reserves the right to request financial information with each application. Additionally, the Bank reserves the right to request that the SHFA submit financial data on a quarterly basis during the term of the
outstanding advance or advances. 
 The Bank generally shall determine an SHFA’s borrowing capacity based on the SHFA’s overall financial and
operating condition and the adequacy of the pledged collateral. Total borrowings (and other Liabilities) may not exceed the lendable value of the pledged collateral. 
 As with all credit decisions, the Bank, in its sole discretion, reserves the right to decline a request for credit from an SHFA that does not meet the Bank’s underwriting or collateral standards. 
 Types of Credit Products: Generally, an SHFA shall have access to the credit products available to a member, except for any affordable housing, community
investment, or economic development program that the Bank may offer only to its members. The Bank may issue a standby letter of credit on behalf of an SHFA for the purpose of residential or economic development lending that benefits individuals or
families meeting specific income requirements. 
 Use of Funds: An advance to an SHFA shall be for the purpose of facilitating residential mortgage
lending that benefits individuals or families meeting the income requirements in section 142(d) or 143(f) of the Internal Revenue Code (26 U.S.C. 142(d) or 143(f)). 
  

 29 

 Maturities: Terms to maturity shall be consistent with those imposed by the particular credit product. However,
terms to maturity shall not exceed the terms of the loan(s) to be funded. 
 Pricing: Pricing and prepayment fees shall be the same as those
applicable to member borrowings. 
 Collateral Requirements: The SHFA must deliver to the Bank or its designated custodian sufficient eligible
collateral to secure its advances (and other Liabilities). The Bank shall accept as collateral the following types of mortgages and securities owned by the SHFA free and clear of any liens, encumbrances, and other interest (at the respective
Lendable Collateral Values shown, as determined by the Bank): 
  

	 	•	 	 First Residential First Mortgage Collateral (85 percent of market value) 

  

	 	•	 	 Multifamily Mortgage Collateral (50 percent of the unpaid principal balance) 

  

	 	•	 	 Private Label Mortgage-Backed Securities (90 percent of market value) 

  

	 	•	 	 HELOC/Second Mortgage-Backed Securities (90 percent of market value) 

  

	 	•	 	 Government and agency securities (97 percent of market value) 

  

	 	•	 	 Deposits at the Bank (100 percent of deposit amount) 

 Miscellaneous: The SHFA must inform the Bank of any material change in financial condition or any change in its status as an SHFA. An SHFA is not required to purchase capital stock in the Bank to secure outstanding advances.

 WAIVERS AND EXCEPTIONS 
 The Bank may, in its sole discretion, waive or otherwise grant exceptions to some or all of the requirements of the Credit and Collateral Policy. Any such waiver or exception shall be approved as provided in the Credit and Collateral
Policy, or by the Bank’s internal credit and collateral committee or the Bank’s Board of Directors, as may be required by Bank policy. 
 REGULATORY COMPLIANCE 
 The Bank will not honor prior advance commitments if the borrower’s access to Bank
advances is subsequently restricted pursuant to the Act or the Regulations and guidelines of the Finance Board. 
  

 30 

 ADVANCE FUNDING AND REPAYMENTS 
 The Bank shall fund advances at such times on the funding date as the Bank shall determine from time to time, and the Bank shall require repayments of advances at such
times on the maturity date as the Bank shall determine from time to time. 
  

 31

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