New reporting requirements from the Federal Home Loan Bank of Atlanta
will change the way mortgages are valued when measuring applicable collateral pledged to the lender.
Beginning Nov. 1, residential first mortgages will no longer be assessed for the Lendable Collateral Value standards on unpaid principal balance, but rather on current market value.
Each member of the Atlanta Fed will see new fields requiring "additional information" added to page two of the Qualifying Collateral Report for home-equity loans and lines of credit.
The transition to market valuations will take effect Dec. 1, according to a statement from the Atlanta Fed.
"By shifting to a market-based valuation methodology, the Bank can measure the current market value of collateral and then adjust for uncertainties with respect to the price and costs associated with liquidation or servicing," the Atlanta Fed said. "This allows the Bank to establish its collateral discounts with greater precision."
Similar to residential first-mortgage loans pledged as collateral, the market values and LCVs of home-equity loans and lines of credit will change monthly.
The Fed will apply these new rules to the commercial real estate sector, including multifamily dwellings, by 2011. The bank will hold a webinar on Thursday to review the new reporting requirements and outline changes to the “Additional Information” fields on the QCR.
Write to Jacob Gaffney