New Jersey Department of
Banking and Insurance
Commissioner Holly C. Bakke

November 26, 2003


Federal Home Loan Bank of New York

A recent announcement from the FHLBny suggests that it may have been guided by misinformation regarding several types of loans. Please be advised that Moody's, Fitch, Standard & Poor's and Fannie Mae have now announced that the only loans that will not be accepted after Nov. 27 are "high cost" loans. The following types of loans are still manageable, still available, still securitizable, and still capable of being monitored with compliance programs. The NJ Home Ownership Security Act permits and encourages these loans.

We will discuss with the FHLBny its interpretation of the Act. In the meantime, you may call the FHLBny to remind them that all rating agencies are now consistent with this approach. The FHLBny Collateral Services can be reached at (201) 356-1065.