as in effect prior to December 30, 1969;

or

(3) Loans having the benefit of any guaranty under section 221 or 222 of such Act, as in effect on December 30, 1969, and thereafter.

(b) Requirement for Board approval. No Bank may acquire any loan, or interest therein, pursuant to paragraph (a) of this section (except to repurchase a participation interest previously sold to a member) without the prior approval of the Board.

(Sec. 12, 47 Stat. 735; 12 U.S.C. 1432) [36 F.R. 7126, Apr. 15, 1971]

§ 524.2-2 GNMA-guaranteed mortgagebacked securities.

as

(a) Acquisition of insured or guaranteed home mortgages. Upon authorization by its board of directors, a Bank may, pursuant to sections 11(h) and 16 of the Federal Home Loan Bank Act, amended, acquire home mortgages for the primary purpose of placing such mortgages in a trust or pool backing an issue or issues of trust certificates or other securities to be guaranteed by the Government National Mortgage Association (GNMA), pursuant to section 306(g) of the National Housing Act, as amended. A Bank may so acquire home mortgages only if such mortgages (1) are insured under the National Housing Act or title V of the Housing Act of 1949, or are insured or guaranteed under the Servicemen's Readjustment Act of 1944 or chapter 37 of title 38, United States Code, and (2) meet the eligibility requirements prescribed by GNMA in 24 CFR Part 1665, Subpart B, and such other eligibility requirements as GNMA may prescribe from time to time under such regulations. Such Bank must obtain the approval of the Board prior to commencing acquisition, including any commitment or agreement with respect thereto, of home mortgages pursuant to this section.

(b) Trustee powers. Upon authorization by its board of directors, a Bank so designated by the Board may act as trustee under any trust created or to be created in connection with the issuance of securities guaranteed by GNMA pursuant to section 306(g) of the National Housing Act, as amended, and may do all things necessary in connection therewith and all things incident thereto, all in accordance with regulations prescribed by GNMA in 24 CFR Part 1665, Subpart B. (c) Issuance of securities. Upon authorization by its board of directors, a

Bank or Banks may, pursuant to section 11(a) of the Federal Home Loan Bank Act, as amended, issue, severally or jointly, and sell bonds or other obligations guaranteed by GNMA pursuant to section 306(g) of the National Housing Act, as amended, and may enter into such agreements as may be necessary for carrying out such issuance and sale, all upon such terms and conditions as the Board may approve.

(Secs. 11, 16, 47 Stat. 733, 736, as amended; 12 U.S.C. 1431, 1436) [35 F.R. 6272, Apr. 17, 1970]

§ 524.3 Transfer of funds between banks.

Interbank borrowing shall be through the medium of unsecured deposits. Such deposits shall bear interest at rates established by the Board.

§ 524.4 Deposits from members.

(a) Banks may accept demand deposits from members, but no interest shall be paid thereon.

(b) Banks may accept time deposits from members but shall reserve the right to require, in writing, at least 30 days' notice of intention to withdraw such deposits or any part thereof. The rates of interest to be paid on such deposits as remain unwithdrawn for periods of 30 days or more may, within the range established by the Board, be set by the board of directors of a Bank or, between regular meetings of such board, by a committee of such directors selected by such board or the President of such Bank if such President is so authorized by such board. Unless otherwise specified by such board, a Bank President may delegate any authority possessed by him in accordance with the provisions of this paragraph to any officer or employee of such Bank.

(c) In addition to acceptance of time deposits in accordance with the provisions of paragraph (b) of this section, Banks may accept time deposits from members on a daily basis and shall reserve the right to require notice prior to a given time period on any day of intention of withdrawal of such deposits or any part thereof on such day. The rates of interest to be paid on such deposits as remain unwithdrawn for a period of one day or more may, within the range established by the Board, be set by the board of directors of a Bank, or, between regular meetings of such board, by a committee of such directors selected

by such board or the President of such Bank if such President is so authorized by such board. Unless otherwise specified by such board, a Bank President may delegate any authority possessed by him in accordance with the provisions of this paragraph to any officer or employee of such Bank.

[23 F.R. 9886, Dec. 23, 1958, as amended at 38 FR 28030, Oct. 11, 1973; 38 FR 29461, Oct. 25, 1973]

§ 524.5 Trustee powers.

Each Bank is authorized to act as trustee in any trust affecting the business of any member, nonmember insured institution, any institution or any group making application for membership in a Bank or for insurance of accounts, or any group making application for a charter for a Federal Savings and Loan Association: Provided, That such trusts are limited to those which are created or which arise for the benefit of the institution as such or for the benefit of its savers, investors or borrowers and/or are in the interest of the promotion of sound and economical home financing: And provided further, That Banks shall cease to act as trustees in the case of applicants if the application is withdrawn or rejected. The Banks are authorized to make reasonable charges for services rendered in connection with such trusts. § 524.6

Budgets.

Each Bank shall prepare and submit to the Board for its approval a budget of operations in the manner and according to the procedure prescribed by the Board or its designee. Each Bank shall submit to the Board with its budget a certificate signed by its president as to the compliance by each of its officers, legal counsel, and employees with the provisions of § 522.70 of this subchapter. The Board will either approve the budget as submitted by each Bank or approve such budget with such adjustments therein as to it appears proper. Such Bank shall be operated within such budget as so approved or as it may be amended. The board of directors of each Bank is authorized, within such limits as the Board may set from time to time, to approve amendments to such budget at any time. If a budget amendment is not within such limits, the Bank shall submit to the Board a request for approval of such amendment. The Board hereby delegates to the Director of the Office of

Each Bank shall maintain adequate surety bonds covering all officers, employees, attorneys, or agents having control over or access to moneys or securities owned by each Bank or in its possession, in companies approved by the Board. The form and amount of such bonds shall be subject to the approval of the Board, and each such bond shall contain a provision requiring the insurer to notify the Board in the event of cancellation of such bond or any reduction in the amount of coverage. A duplicate original of each such bond, or a copy certified by the insurer or its authorized agent, and evidence of the continuation of each such bond shall be submitted to the Board.

[37 F.R. 18287, Sept. 9, 1972]

Each bank shall comply with all provisions of law as to the maintenance of liability, compensation or other insurance, and may maintain such additional forms and amount of insurance as in the opinion of its board of directors is necessary to protect the interests of the Bank.

§ 524.9 Safe-keeping accounts.

All securities owned by each Bank shall be held in either the Federal Reserve Bank of New York or the Federal Reserve Bank of Chicago, subject to the order of the Secretary of the Treasury, who will promptly transmit to the Federal Reserve Bank concerned all orders affecting such safe-keeping accounts which have been delivered to him by the Board: Provided, however, That any Bank may make arrangements with a Federal Reserve Bank or with one of its depositary commercial banks to hold in safe-keeping United States Treasury Bills and/or Certificates or Indebtedness owned by it subject only to its order. Without regard to the provisions of this section, any special series United States Treasury Notes held by or for the account of any Bank may be held with the Treasurer of the United States or with such depositary or depositaries as may be designated by the Board.

§ 524.10 Securities held in trust or as collateral.

Bonds and negotiable securities held by a Bank as collateral or in trust shall be placed in the custody of a Federal Reserve Bank or branch thereof, a financial institution which is a member of the Federal Reserve System or of the Federal Deposit Insurance Corporation, or under such other arrangement as may be approved by the Board: Provided, however, That this section shall not apply to bonds and negotiable securities held in custody pursuant to the plan for the handling of security transactions of member institutions approved August 13, 1943. § 524.11

Depositaries.

525.31

525.32

Mortgage moratoria laws.

Mortgages subject to prior tax liens.
Reports on mortgage collateral.
Split mortgages.

Additional collateral.

Advances secured by other securities. Advances secured by members' deposits.

UNSECURED ADVANCES

Acceleration of maturity.

Advances to pay debts.

Short term advances.

ADVANCES TO NONMEMBER MORTGAGES

525.33

Lines of credit.

525.34 Eligible institutions. 525.35 Rates of interest.

525.36 Applications for advances.

AUTHORITY: The provisions of this Part 525 issued under sec. 17, 47 Stat. 736, as amended; 12 U.S.C. 1437, Reorg. Plan No. 3 of 1947; 3 CFR, 1943-1948 Comp., unless otherwise noted.

SOURCE: The provisions of this Part 525 appear at 23 FR 9888, Dec. 23, 1958, unless otherwise noted.

GENERAL PROVISIONS RESPECTING
ADVANCES

§ 525.1

Limitations on advances.

A Bank shall not, unless otherwise directed by the Board, advance to any member an aggregate amount in excess of the amount for which such member can legally obligate itself or 50 percent of such member's net assets or 50 percent of such member's liability for shares and deposits, whichever is the least.

§ 525.2 Extension of credit.

The board of directors of each Bank shall adopt, and review at least every 6 months, a policy governing the extension of credit to the members of the Bank which is consistent with this subchapter and policy directives of the Board. The officers of the Bank designated by its board of directors may extend or deny credit and take such other action as is in conformity with the credit policy of the Bank, this subchapter, and policy directives of the Board. No advance shall be made or other credit ac

ception to the credit policy of the Bank without the prior approval of the board of directors or a committee of directors designated by the board of directors to approve exceptions, and no exception shall be made to this subchapter or policy directives of the Board unless authorized by and made in accordance with this subchapter and policy directives of the Board. The board of directors shall require the officers of the Bank to report promptly to it or to the executive committee all actions taken under this section, and shall review such actions for compliance with this section,

[32 F.R. 976, Jan. 27, 1967]

§ 525.3 Interest rates.

The rates of interest on advances to members shall, within the range established by the Board, be set by the board of directors of each Bank or, between regular meetings of such board, by a committee of such directors selected by such board or the President of such Bank if such President is so authorized by such board. Unless otherwise specified by such board, a Bank President may delegate any authority possessed by him in accordance with the provisions of this section to any officer or employee of such Bank.

[38 FR 28030, Oct. 11, 1973]

§ 525.4 Bank stock collateral.

The Bank's actual possession of fully paid certificates of stock is not necessary under the provisions of section 10 (c) of the act before making an advance to a member. However, the assignment of such stock should be in the note or other form of obligation used.

ADVANCES SECURED BY HOME MORTGAGES OR OBLIGATIONS OF THE UNITED STATES § 525.10 Terms of advances.

The Banks may make advances to members on the security of home mortgages and/or obligations of the United States, as provided in section 10 of the Act, for periods of not to exceed ten years. Under section 10(b) (2) of the Act, the Board authorizes the banks to accept as collateral security a home mortgage of not to exceed $82,500 with respect to dwellings in Alaska, Guam, and Hawaii. (Secs. 10, 17, 47 Stat. 731, 736, as amended; 12 U.S.C. 1430, 1437. Reorg. Plan No. 3 of 1947, 12 FR 4981, 3 CFR, 1943-48 Comp., p. 1071.) [39 FR 40010, Nov. 13, 1974]

mortgage collateral.

Subject to the limitations prescribed by the act, each Bank shall exercise its judgment in determining the collateral value of each mortgage.

§ 525.12 Joint home and business property; joint dwelling units and business property.

A first mortgage on real estate upon which is located, or which comprises or Includes, one or more homes or other dwelling units, if otherwise eligible, does not become ineligible because the real estate also has other improvements thereon.

(Secs. 2, 10, 47 Stat. 725, as amended, 731, as amended; 12 U.S.C. 1422, 1430) [28 F.R. 4838, May 15, 1963]

§ 525.13 Home mortgages exceeding $55,000.

A home mortgage which was originally written for more than a sum equal to $55,000, or $82,500 with respect to dwellings in Alaska, Guam, and Hawaii, for each home or other dwelling unit covered by such mortgage, but which has been reduced to not more than said sum, may be accepted as collateral, if otherwise eligible.

[39 FR 40010, Nov. 13, 1974]
§ 525.14 Past due mortgages.

A home mortgage is held to be “past due more than 6 months when presented" if, (a) that date is more than 6 months after its final maturity date, or (b) if at that date, 6 months or more have elapsed since the holder has declared a default of the home mortgage, or (c) if at that date a sum has accrued and remains unpaid equivalent to the required contract payments for a period of 6 months beyond the time when the holder of the mortgage has an option to declare the whole of the debt due and collectible.

§ 525.15 Curing of delinquencies on past due mortgages.

A mere waiver by the holder of a mortgage of contracted amortization payments shall not constitute a cancellation of such delinquency, but the parties thereto may enter into a written contract modifying the terms of repayment, the effect of which may be to make the mortgage eligible as collateral.

§ 525.16 Mortgage moratoria laws.

The Banks may give full faith and credit to acts of State legislatures in reference to extending home mortgage indebtedness.

§ 525.17 Mortgage collateral becoming past due.

A home mortgage which becomes more than 6 months past due while held by a Bank as collateral, may be retained, but the Bank in such cases shall call for such additional collateral as to the Bank may appear to be appropriate for the full and adequate security of its loan.

§ 525.18 Mortgages subject to prior tax liens.

The Banks are authorized to accept and retain as collateral, home mortgages on property on which there exists a prior tax lien, provided there is not reasonable danger that such property will be sold for taxes. Full consideration shall be given to such unpaid taxes, if any, when fixing the collateral value of such mortgages.

§ 525.19 Reports on mortgage collateral.

At least annually, each borrowing member shall be required to furnish its Bank with a report of the current status of each home mortgage pledged to said Bank as collateral. The form of the report shall be subject to the approval of the Board.

§ 525.20 Split mortgages.

In the case of a so-called "split mortgage", where two or more mortgages are written upon identical property but where the contract or contracts provide that a portion of such indebtedness shall be carried as a straight mortgage and a portion as an amortized mortgage, then, if the mortgage is otherwise eligible, that portion which is amortized may be accepted as collateral under the provisions of section 10(a) (2) or (3) of the act, as the Bank may elect, but that portion which is not amortized may be accepted only under the provisions of section 10 (a) (3) of the act. However, no "split mortgage" shall be accepted as collateral unless the entire mortgage debt is pledged.

§ 525.21 Additional collateral.

If, during the time an advance is outstanding, a deficiency of eligible collateral should develop, and a satisfactory,

39-057-75-17

corresponding reduction in the amount of the advance cannot be obtained, a Bank may protect its interest by obtaining any collateral which will strengthen its position.

§ 525.25 Advances secured by other securities.

Advances to members secured by securities other than obligations of the United States may be made by each Bank for periods not to exceed 1 year, under the provisions of section 11(g) (3) of the act: Provided, (a) That the securities so held as collateral constitute an investment in which the member is legally authorized to invest its funds; (b) that such securities have a readily accertainable market value; and (c) that such securities are not in default with respect to payments of interest or principal. Advances under this section shall not be made in an amount in excess of 80 percent of the market value or principal amount of such securities, whichever is less, provided that advances in amounts not in excess of face value may be made upon the security of consolidated Federal Home Loan Bank obligations.

§ 525.26 Advances secured by members' deposits.

Advances for periods not exceeding 1 year may be made to a member under the provisions of section 11(g) (3) of the act, on the security of time deposits of such member, in an amount not exceeding the total amount of said deposits. UNSECURED ADVANCES Acceleration of maturity.

§ 525.30