Readily ascertainable value. Current § 950.9(a)(4)(i)(A) of the Advances Regulation requires other real estate-related collateral to have a readily ascertainable value. See 12 CFR 950.9(a)(4)(i)(A). The Finance Board stated in the SUPPLEMENTARY INFORMATION section of the proposed rule that the liquidation value of collateral, and the ability to liquidate the collateral quickly, is a more appropriate measure of the value of other real estate-related collateral securing an advance, particularly given the lifting of the 30 percent cap. Accordingly, proposed § 950.7(a)(4)(i)(A) provided that other real estate-related collateral have a readily ascertainable liquidation value and be able to be freely liquidated in due course. As discussed above, this change also was proposed in § 950.7(b)(1)(i) with respect to CFI- eligible collateral. A significant number of Bank commenters opposed this change on the ground that liquidation value is difficult or impossible to measure and, therefore, impractical as a standard. The commenters also found the phrase ‘‘freely liquidated in due course’’ to be unclear in terms of when and how frequently such determination would have to be made. In response to the Banks’ concerns, the final rule has been revised to provide that other real estate-related collateral is eligible to secure advances if it has ‘‘a readily ascertainable value, can be reliably discounted to account for liquidation and other risks, and can be liquidated in due course.’’ This standard is intended to clarify that the critical factor is the Bank’s ability to reliably discount the collateral in question. The phrase ‘‘can be liquidated in due course’’ is intended to mean that there are no known impediments to liquidation at the time the collateral is accepted by the Bank. As discussed above, this change also is made in § 950.7(b)(1)(i) of the final rule with respect to CFI-eligible collateral.
