Frequently Asked Questions:
Automated Loan Deposit Program

Table of Contents

I. Introduction to the Automated Loan Deposit Program
II. Transmission Methods
III. Documentation Requirements
IV. Loan File Contents
V. Programming Requirements

I. Introduction to the Automated Loan Deposit Program

• Is my institution required to participate in the Automated Loan Deposit program?

No, participation in the Automated Loan Deposit program is not required, but is offered as an option to current participants in the Borrower-in-Custody (BIC) collateral pledge program, Custodian collateral pledge program, and/or Treasury Investment Program (TIP). Institutions that do not wish to take advantage of the Automated Loan Deposit program may continue to submit paper loan trials to the Federal Reserve Bank.

• Why would my institution want to participate in the Automated Loan Deposit program?

It is our hope that electronic submission of your pledged loan detail will reduce your overall reporting burden by eliminating the need for you to print and mail to us hardcopy listings of your pledged collateral. It will be especially beneficial to those depository institutions pledging a large number of loans.

In addition, receipt of a detailed loan file in electronic form will allow Federal Reserve Banks to use individual loan data in computing its collateral margins (which determine the value that pledged collateral will be given by the Federal Reserve Banks), and could result in more precise margins for depository institutions.

• What does my institution need to do to participate in the Automated Loan Deposit program?

Your institution will need to submit an electronic file that conforms to the Federal Reserve Bank's electronic loan file specifications [MS Word; 102K]. Your institution will also need to execute an electronic pledge authorization letter [MS Word; 32K] if you will be sending Automated Loan Deposit files via e-mail. In addition and if applicable, your Custodian will need to execute a Custodian Electronic Pledge Authorization Letter [MS Word; 33K].





II. Transmission Methods

• In what medium may Automated Loan Deposit files be submitted?

Files may be sent via mail on a CD-ROM, diskette, or as an email attachment.

If your institution chooses to send the Automated Loan Deposit files via email, please execute an Electronic Pledge Authorization Letter [MS Word; 33K] first. If applicable, your Custodian must execute a Custodian Electronic Pledge Authorization Letter [MS Word; 33K] as well.

The e-mail must be sent by an individual authorized by the Electronic Pledge Authorization Letter(s). Cover Letters [MS Word; 26K] accompanying Automated Loan Deposit files sent via CD-Rom or diskette must continue to be signed by an individual authorized to do so per Operating Circular No. 9 (for Treasury collateral)[PDF; 88K] or Operating Circular No. 10 [PDF; 249K].

• Do Automated Loan Deposit files sent via e-mail need to be encrypted?

Pledging institutions should consider their information security requirements before sending loan files electronically. If requested, the Federal Reserve Banks will work with depository institutions to receive encrypted information or otherwise meet the requirements of an institution's information security program.






III. Documentation Requirements

• Does my institution need to use the Cover Letter provided or can it use its own customized form?

Yes. All depository institutions should use the standard Cover Letter [MS Word; 26K].

• Does my institution need to execute an agreement to participate in the Automated Loan Deposit program?

Your institution must execute the Electronic Pledge Authorization Letter [MS Word; 33K] and, if applicable, your Custodian must execute the Custodian Electronic Pledge Authorization Letter [MS Word; 33K] upon initiation into the Automated Loan Deposit program if you plan to send loan files to the Reserve Bank via e-mail. Agreements are not required to send loan files on CD-Rom or diskette.

• Does my Custodian also have to agree to participate in the Automated Loan Deposit program?

Yes. As required by Federal Reserve System policy, the Federal Reserve Bank must have any Custodian verify the accuracy of loan trials submitted by a depository institution on at least a monthly basis. Automated Loan Deposit files sent via e-mail should be routed through your Custodian prior to submission to the Reserve Bank; the email that the Reserve Bank receives must either have been sent by the depository institution to the Custodian and then forwarded by the Custodian to the Reserve Bank, or sent by the Custodian to the depository institution and then forwarded to the Reserve Bank.

Also, as mentioned earlier, the depository institution and Custodian must each execute a letter of agreement with the Federal Reserve Bank prior to participating in the Automated Loan Deposit program; the depository institution must execute an Electronic Pledge Authorization Letter [MS Word; 33K] and the Custodian must execute a Custodian Electronic Pledge Authorization Letter [MS Word; 33K].






IV. Loan File Contents and Submission Frequency

• How often must my institution submit a new Automated Loan Deposit file to the Federal Reserve Bank?

Automated Loan Deposit files will be required at the same frequency as loan trials are currently submitted to the Federal Reserve Bank. The trials are now due on a periodic basis (at least monthly), as well as any time the total current outstanding book value of all loans listed on the trial decreases by 10% or more.

Each file may contain loans that are not currently pledged and/or updated principal balances for loans that are currently pledged. In addition, the file may exclude loans that are no longer pledged.

• What if my institution participates in more than one collateral program (e.g., maintains both BIC and Custodian Collateral pledge arrangements)?

Although the programming elements will not differ, separate loan files will be required for each collateral program. For example, an institution participating in both the BIC and Custodian Collateral pledge programs would send at least two separate loan files, one listing loans held in a BIC arrangement and another listing loans held by a Custodian.

A depository institution may also choose to submit multiple files for the same asset type or collateral program (securities account number), but each file must have its own unique Loan Identifier (please see electronic loan file specifications [MS Word; 102K] for more information).

• What if my institution pledges more than one loan type to the Federal Reserve Bank and/or Treasury?

Although the programming elements will not differ, a separate Automated Loan Deposit file will be required for each loan type. For example, a depository institution holding both commercial loans and residential real estate loans in a BIC arrangement would submit one loan file for the commercial loans and another for the residential real estate loans.

Additionally, a separate Automated Loan Deposit file will be required for each pledge arrangement. For example, a depository institution pledging commercial loans under both BIC and Custodian Collateral arrangements must submit one loan file for loans held in a BIC arrangement and another for the loans held in a Custodian Collateral arrangement.

Similarly, if multiple loan types are held in different pledge arrangements, multiple loan files would be required. For example, a depository institution pledging commercial loans and residential real estate loans held in a BIC arrangement, as well as commercial loans and residential real estate loans held at a Custodian, must submit four Automated Loan Deposit files (one for the commercial loans held in a BIC arrangement, a second for the residential real estate loans held in a BIC arrangement, a third for the commercial loans held in at the Custodian, and a fourth for the residential real estate loans held at the Custodian).

A depository institution may also choose to submit multiple files for the same asset type or collateral program (securities account number), but each file must have its own unique Loan Identifier (please see electronic loan file specifications [MS Word; 102K] for more information).






V. Programming Requirements

• How much programming will be required for my institution to participate in the Automated Loan Deposit program?

The extent to which programming will be required depends on your own loan system. In order to participate in the Automated Loan Deposit program, your institution's must send a fixed position text file that conforms to the Federal Reserve Bank's electronic loan file specifications. To ease processing, depository institutions are encouraged to program the edits listed on page 4 of the electronic loan file specifications into their loan data file extraction.

• Are all fields listed in the Federal Reserve Bank's loan file specifications required?

No. Certain fields are optional and may be left blank (as indicated in the descriptions in the electronic loan file specification tables [MS Word; 33K]).

• What records must be included in an Automated Loan Deposit file?

Each file should include only one Header Record (the first record in the file) and only one Trailer Record (the last record in the file). In addition, the file should include (i) one Obligor Record and one loan detail record for each loan that is not part of a master note facility, and (ii) for each master note facility, one Obligor Record and one Master Note Record, as well as a Loan Detail Record for each individual drawdown under the facility. (Please see electronic loan file specifications [MS Word; 102K] for more information).

• What if a required field is left blank or does not otherwise conform to the Federal Reserve Bank's electronic loan file specifications?

Loans where required fields are left blank or not completed in accordance with the electronic loan file specification tables [MS Word; 102K] will not receive value. The Federal Reserve Bank will work with depository institutions to make programming changes as needed. To ease processing, depository institutions are encouraged to program the edits listed on page 4 of the electronic loan file specifications into their loan data file extraction.