12 C.F.R. § 360.2

Federal Home Loan banks as secured creditors

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(a) Notwithstanding any other provisions of federal or state law or any other provisions of these regulations, the receiver of a borrower from a Federal Home Loan Bank shall recognize the priority of any security interest granted to a Federal Home Loan Bank by any member of any Federal Home Loan Bank or any affiliate of any such member, whether such security interest is in specifically designated assets or a blanket interest in all assets or categories of assets, over the claims and rights of any other party (including any receiver, conservator, trustee or similar party having rights of a lien creditor) other than claims and rights that

(1) Would be entitled to priority under otherwise applicable law; and

(2) Are held by actual bona fide purchasers for value or by actual secured parties that are secured by actual perfected security interests.

(b) If the receiver rather than the Bank shall have possession of any collateral consisting of notes, securities, other instruments, chattel paper or cash securing advances of the Bank, the receiver shall, upon request by the Bank, promptly deliver possession of such collateral to the Bank or its designee.

(c) In the event that a receiver is appointed for any member of a Federal Home Loan Bank, the following procedures shall apply:

(1) The receiver and the Bank shall immediately seek and develop a mutually agreeable plan for the payment of any advances made by the Bank to such borrower or for the servicing, foreclosure upon and liquidation of the collateral securing any such advances, taking into account the nature and amount of such collateral, the markets in which such collateral is normally traded or sold and other relevant factors.

(2) In the event that the receiver and the Bank shall not, in good faith, be able to develop such a mutually agreeable plan, or, in the interim, the Bank in good faith reasonably concludes that the value of such collateral is decreasing, because of interest rate or other market changes, at such a rate that to delay liquidation or other exercise of the Bank's rights as a secured party for the development of a mutually agreeable plan could reasonably cause the value of such collateral to decrease to an amount that is insufficient to satisfy the Bank's claim in full, the Bank may, at any time thereafter if permitted to do so by the terms of the advances or other security agreement with such borrower or otherwise by applicable law, proceed to foreclose upon, sell, lease or otherwise dispose of such collateral (or any portion thereof), or otherwise exercise its rights as a secured party, provided that the Bank acts in good faith and in a commercially reasonable manner and otherwise in accordance with applicable law.

(3) The foregoing provisions of this paragraph (c) shall not apply in the event that a purchase and assumption transaction is entered into regarding any such member.

(d) The Bank's rights pursuant to the second sentence of section 10(d) of the Federal Home Loan Bank Act shall not be affected or diminished by any provisions of state law that may be applicable to a security interest in property of the member.

(e) The receiver for a borrower from a Federal Home Loan Bank shall allow a claim for a prepayment fee by the Bank if, and only if:

(1) The claim is made pursuant to a written contract that provides for a prepayment fee, provided, however, that such prepayment fee allowed by the receiver shall not exceed the present value of the loss attributable to the difference between the contract rate of the secured borrowing and the reinvestment rate then available to the Bank; and

(2) The indebtedness owed to the Bank by such borrower is secured by sufficient collateral in which a perfected security interest in favor of the Bank exists or as to which the Bank's security interest is entitled to priority under section 306(d) of the Competitive Equality Banking Act of 1987 (CEBA) (12 U.S.C. 1430(e), footnote (1), or otherwise so that the aggregate of the outstanding principal on the advances secured by such collateral, the accrued but unpaid interest thereon and the prepayment fee applicable to such advances can be paid in full from the amounts realized from such collateral. For purposes of this paragraph (e)(2), the adequacy of such collateral shall be determined as of the date such prepayment fees shall be due and payable under the terms of the written contract providing therefor.

[54 FR 19156, May 4, 1989. Redesignated at 54 FR 42801, Oct. 18, 1989, and further redesignated at 55 FR 46496, Nov. 5, 1990. Redesignated at 58 FR 67664, Dec. 22, 1993, as amended at 63 FR 37761, July 14, 1998]

Notes of Decisions

Cited in 12 cases, 1991–2002 · leading case: First Annapolis Bancorp, Inc. v. United States, 54 Fed. Cl. 529 (Fed. Cl. 2002).

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First Annapolis Bancorp, Inc. v. United States, 54 Fed. Cl. 529 (Fed. Cl. 2002). · cites it 9× “See 12 C.F.R. § 360.2 (1991). 5 The FDIC’s argument appears to be that unlike in the Glass and Landmark cases, which interpreted the 1994 version of the National Preference Act, Article III, Section 2 of the Constitution is satisfied because under the 1990 version of the…”

The Resolution Trust Corp., as Receiver for Germantown Trust Sav. Bank v. Cheshire Mgmt. Co., Inc., 18 F.3d 330 (6th Cir. 1994). · cites it 2× “12 C.F.R. § 360.2 (a). Cheshire attempted to escape this payment hierarchy by “securing” its judgment against the RTC.”

Resolution Trust Corp. v. W. Tech., Inc., 877 P.2d 294 (Ariz. Ct. App. 1994). “The court in Heinhold Commodities also held that a fee award is a first priority unsecured claim pursuant to 12 C.F.R. sections 360.2(a)(1). 803 F.Supp.”

Parker North Am. v. Resolution Trust Corp. (In Re Parker North Am.), 131 B.R. 452 (Bankr. C.D. Cal. 1991). “Here RTC argues that it must liquidate all claims against Sooner in accordance with the priority scheme set forth in 12 C.F.R. § 360.2 , which grants priority to depositors’ claims over general creditors.”

Breakers Point Homeowners Ass'n v. Resolution Trust Corp., 829 F. Supp. 336 (D. Or. 1992). · cites it 14× “Franklin which defendant has classified as a Priority 7 under 12 C.F.R. § 360.2 (a). Plaintiff contends that its claim should be classified as a Priority 6.”

Santopadre v. Pelican Homestead & Sav. Ass'n, 937 F.2d 268 (5th Cir. 1991). · cites it 2× “The regulations accord priority to persons with claims for withdrawable accounts and to persons holding any “other claims which have accrued and become unconditionally fixed on or before the date of default.”

Resolution Trust Corp. v. Heinhold Commodities, Inc., 803 F. Supp. 1342 (N.D. Ill. 1992). · cites it 3× “II HEINHOLD’S MOTION TO DETERMINE PRIORITY Heinhold moved for a determination that its claim for attorneys’ fees and costs against the RTC as receiver for Commonwealth Federal is a first priority unsecured claim pursuant to 12 C.F.R. § 360.2 (a)(1). This section provides that…”

Del E. Webb McQueen Dev. Corp. v. Resolution Trust Corp., 69 F.3d 355 (9th Cir. 1995). · cites it 14× “Because Sun State’s obligation to pay the letter of credit was contingent, the Resolution Trust Corporation (RTC) properly classified Del Webb’s claim under the letter of credit as a priority 7 and not a priority 6 claim, pursuant to 12 C.F.R. § 360.2 . 1 I FACTS On December 31,…”

Publicker Indus. Inc. v. United States (In re Cuyahoga Equip. Corp.), 980 F.2d 110 (2d Cir. 1992). “Without an accrued and unconditionally fixed claim against the bank existing on or before its date of default, see 12 C.F.R. § 360.2 (a)(7) (1992), and filed within 90 days with the Resolution Trust, see 12 U.”

First Bank Nat'l Ass'n v. Fed. Deposit Ins., 885 F. Supp. 117 (E.D. Pa. 1995). “See 12 C.F.R. § 360.2 (a)(7). Finally, First Bank claims it is entitled under the sublease to amounts needed to modify the building to comply with the ADA.”

Franklin Fin. v. Resolution Trust Corp., 53 F.3d 268 (9th Cir. 1995). “On motions for partial summary judgment, the court found that the RTC’s repudiation was not undertaken within a reasonable period after appointment as receiver and therefore constituted a material breach of the Lease.”

Stattin v. Resolution Trust Corp., 883 F. Supp. 678 (M.D. Fla. 1995). · cites it 2× “At that time, the RTC and FDIC prioritized the unsecured claims against a failed institution or a receiver of the institution, for the purpose of distributing funds, pursuant to 12 C.F.R. § 360.2 (“Section 360.3”). 3 That section provides: (а) Unsecured claims against an…”

— 12 C.F.R. § 360.2(a) — 1 case

Breakers Point Homeowners Ass'n v. Resolution Trust Corp., 829 F. Supp. 336 (D. Or. 1992). “Franklin which defendant has classified as a Priority 7 under 12 C.F.R. § 360.2 (a). Plaintiff contends that its claim should be classified as a Priority 6.”

— 12 C.F.R. § 360.2(a)(1) — 1 case

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