Federal Home Loan Bank (FHLB)
How does the FHLB LOC assist borrowers?
It is an extra layer of credit enhancement to boost the credit rating of the member bank LOC and thus reduce the interest rate borrowers pay.
Types of FHLB LOC?
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Traditional Standby - The FHLB guarantees the payment of the interest and principle on behalf of member bank.
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Confirming - The LOC issued by the members are guaranteed by the FHLB.
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Direct Pay - the beneficiary gets paid directly from the FHLB. No need for the member bank involvement.
How does it work?
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