Additional Guidance for Loan Collateral

1: Introduction

This guidance addresses frequently asked questions from participants and will be updated periodically. It complements and expands upon key sections of both the Guide to Pre-positioning Loan Collateral and the Guide to the Management of Loan Collateral, providing additional clarity and practical detail. Accordingly, this guidance should be read alongside those guides to ensure a comprehensive understanding of the requirements and processes for Level C loan collateral.

Section 5 on this page supports the Guide to the Management of Loan Collateral and elements within the other sections are aimed to support both the Guide to Pre-positioning Loan Collateral and the Guide to the Management of Loan Collateral.

2: Eligibility and loan pool composition

2.1: Maximum loan to value (LTV) for eligible loans

There is no maximum LTV restriction. However, loan portfolios comprising loans with high LTVs are likely to be subject to higher haircuts.

2.2: Loan maturity

The residual loan maturity at the point of pre-positioning is:

• between three months to forty years for residential mortgage loans, corporate loans, SME loans, social housing loans and PFI loans
• no minimum for consumer loans, auto loans and asset finance loans

2.3: Offset mortgage loan eligibility

Certain offset mortgage products are eligible, although current account mortgages are not eligible.

2.4: Loans in arrears

Loans that are already in arrears or classified as in default—also referred to as non-performing loans—must not be included at the point of pre-positioning or topping-up. Once a loan pool has been pre-positioned, any loans that subsequently fall into arrears should remain within the pool and reported appropriately in regular data tapes.

Where a loan defaults after pre-positioning, it should continue to be reported in the data tape with Account Status field (AR166/AN42/PF97/SH98/AC259/AA53/AL140) marked as Default or Foreclosure (‘3’). You should also update Bankruptcy or Individual Voluntary Arrangement Flag (AR36/AN78/SH97/AA87/AL187) if it is applicable and relevant. If defaulted loans begin to perform the Account Status field will need to be updated appropriately. For SME loans, defaulted loans should be reported in the ‘Defaulted Loans’ tab of the data template.

3: Due diligence questionnaire (DDQ)

3.1: Completing the DDQ

You will need to respond to all questions within the DDQ. If a question cannot be answered, a valid justification should be provided.

For repeated DDQ submissions you will need to complete and submit a redline version of the DDQ highlighting all changes against the previously submitted DDQ along with updated versions of supporting documents.

3.2: Multiple product types

Only one questionnaire is required for each business line or product. If the portfolio proposed for pre-positioning is similar to a portfolio which is already pre-positioned, then we are typically content to accept DDQ responses which details only any differences to the original portfolio.

3.3: Northern Ireland and Scottish loan portfolios

Northern Ireland and Scottish loan portfolios do not require separate due diligence questionnaires. You will need to notify your collateral contact of any differences in policies and processes with Scottish or Northern Ireland loans. Scottish loans need to be separated from English loan portfolios and are subject to separate legal due diligence. Northern Irish-law loans can be submitted in the same portfolio as English loans but will also require separate legal due diligence.

4: Loan data template

4.1: Formatting

4.1.1: Data template file format

Acceptable file formats are Excel 2007 onwards (XLSX), comma separated (CSV) and tab delimited (txt). Files prior to Excel 2007 (XLS) are not accepted.

4.1.2: Confirmation of data template submission

Data tapes must be submitted via the Loans Data Portal. The portal automatically validates the data tape on upload. The tape will be rejected if the data fails to meet the established validation rules (eg, missing data, incorrect formatting, invalid values, etc.). An automated email detailing the validation failures will be sent in response. If you wish to test data submission, test files can be submitted to us to confirm that the data can be successfully received and processed correctly. Please reach out to your collateral contact for advice. For any queries about the definition of fields or whether it is mandatory or not, please contact the Loans Data Team who will provide further advice, via LoansData@bankofengland.co.uk.

4.2: Data Field instructions

This section references specific fields and provides relevant field numbers from the residential mortgage template. Where the same fields exist in templates for other asset classes, these instructions should still be followed, applied to the relevant field – unless otherwise stated.

4.2.1: Secondary borrower fields

If the number of borrowers (AR19) > 1, all fields with reference to a secondary borrower must be completed. If any information is unavailable, this should be explained in the glossary as outlined in the DDQ.

4.2.2: Borrower identifier (AR7)

If there are multiple borrowers on a loan, they should all be listed comma delimited in this field, with the primary borrower listed first.

4.2.3: Borrower year of birth (AR18)

Borrower year of birth should reflect only the year in which the primary borrower was born. If this information is unavailable, please report ‘9999’ in place of ‘ND’ (No Data), and provide an explanation in the glossary (this is explained in ‘4.3: Data tape glossary’ on this page).

4.2.4: County court judgement fields (AR31-35, AR192-196)

When reporting county court judgements (CCJs), if there are CCJs recorded against a borrower at time of underwriting, this should be recorded in fields AR31 – AR34, and AR35 (Last County Court Judgements or equivalent – Date) becomes mandatory. If there are no CCJs then the date field may be left blank.

The number and value of CCJs cannot be negative.

4.2.5: Shared ownership (AR60)

Shared ownership and shared equity loans should be reported in AR60. Where a loan is shared ownership or shared equity (AR60 =/= 1), AR103 and AR104 become mandatory and must be completed.

4.2.6: Interest rate reporting (AR107-121)

The current interest rate margin (AR110) for fixed rate loans (AR107= 3, 4 or 5) should be the same as the interest rate.

We would prefer if the current interest rate index (AR108) for fixed rate loans (AR107= 3, 4 or 5) is left blank. However, ND is an acceptable input for that field for fixed rate loans.

4.2.7: Geographic region (AR128)

Geographic region should be supplied as an International Territorial Levels (ITL) 1 classification code. The code TLZ is no longer accepted. The geographic region should match the supplied postcode.

4.2.8: Property postcode (AR129)

Only the outcode of the property postcode should be supplied. The outcode is the part of the postcode that comes before the space and is made up of two to four characters. The outcode is made up of one to two alphabetic characters to represent the postal area and one to two digits to represent the postal district. Some examples of outcodes include L1, W1A, RH1, RH10, and SE1P. The supplied property postcode should match the supplied geographic region (this is explained in ‘4.2.7: Geographic region (AR128)’ on this page).

4.2.9: Valuation amount (AR154)

The data template requires the ‘property value as of date of latest loan advance’. This means that:

• if a further advance is not made, the valuation should not change
• if a further advance has been made (more information can be found in ‘4.4.4: Further advances’ on this page), all rows relating to the associated loan and backed by the underlying property should be refreshed with the new property value as of the date of the latest further advance

If a new valuation amount becomes available despite there being no new further advances, it should be reported in Current Valuation Amount (AR143).

4.2.10: Annual rental income (AR154)

Gross Annual Rental Income (AR154) is mandatory for Buy To Let (BTL) properties.

Please report the gross annual rental income earned for the individual property in each data tape row. If this property-level data is not in your system, please take the loan-level rental income and divide it by the number of properties backing the loan to input the average rental income.

Do not include any personal income in reported rental income (ie no ‘top-slicing’).

4.2.11: Current and potential energy performance certificate (AR162 and AR163)

Current and Potential EPC ratings must be reported in the data tape using a single letter in line with the data template guidance eg when the property has a current EPC D rating, please record this as ‘D’ within AR162 in the data tape.

EPC ratings information should be either based on information provided by the borrower directly (eg at the time of underwriting), or from the public EPC databases for properties in England, Wales, and Northern Ireland or Scotland.

Please provide the most recent EPC data available, even if the certificate has expired.

In cases where you cannot obtain data and know that the property was not required to have a valid EPC rating at the time of underwriting (eg because the property was bought before 2008, or because the last required rating had expired by the time of underwriting) please select ‘NR’ (No Rating).

In cases where you cannot obtain data but are unable to confirm that the property was not required to have a valid EPC rating at the time of underwriting, please select ‘ND’. Please do not leave these fields blank in the data tape.

Please do not submit any ‘modelled’ EPC ratings.

4.2.12: Exemptions from energy efficiency regulation (AR164)

Select 'Y' (Yes) if you can confirm that a property benefits from any of the exemptions listed in 'The Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015'.

In all other cases you should select ‘ND’. This includes cases where the property is not subject to the regulation.

4.2.13: Maximum balance (AR87)

This field should be used to reflect the maximum loan amount that could potentially be outstanding. This is for loans with flexible re-draw facilities or committed further lending, not further advances which are underwritten again.

4.3: Data tape glossary

Data are requested on a ‘comply or explain’ basis. If data cannot be provided for a specific field, or if a particular definition cannot be applied, the rationale should be clearly outlined in an accompanying glossary. For any uncertainties or challenges in producing the required data, please consult your collateral contact. This will enable us to provide appropriate guidance and avoid making assumptions. Please note that where any mandatory fields cannot be completed, we will make conservative assumptions.

4.4: Common reporting queries

4.4.1: File formatting

Participants should delete the blank rows at the bottom and side of data tape. This should be done by ‘right clicking’ and selecting ‘Delete’ rather than using the keyboard.

4.4.2: Cut-off date

The cut-off date used in the data tape must match the cut-off date selected in the portal, otherwise the data tape will be rejected as invalid.

4.4.3: Mandatory fields

All mandatory fields must be completed for all loans, and any fields with missing data will result in the entire tape being rejected until a correction is made. Note that some fields are only conditionally mandatory, for example AR108 is only mandatory when AR107 = 1, 2, 6 or 7.

4.4.4: Optional fields

Where data is available for optional fields, it should be reported. This will allow us to produce a more accurate haircut. Where a field is left blank or ND is reported, we often make a conservative assumption. If the data is not available, an explanation should be provided in the glossary, as outlined in the template instructions.

4.4.5: Arrears

When a loan falls into arrears, it should continue to be reported in the monthly tape with all relevant arrears fields completed (AR166-172). More information can be found in ‘2.4: Loans in arrears’ on this page.

4.4.6: Redeemed loans

When a loan is redeemed, it should be reported in the tape as redeemed (AR166 = 4) for one monthly submission after redemption, and with a current balance of zero. The loan should then be removed from all subsequent tapes, ie from the second month after redemption, and onwards.

4.4.7: Further advances

Further advances must be reported within data tapes. They should be included within the next data tape submission post-completion. Our expectation is that the lender is granted a first ranking, registered ‘all monies’ charge by the borrower so that any subsequent further advances would be protected by the initial charge and have the same first-ranking priority. There is no minimum seasoning requirement for further advances.

Further advances should be signified by utilising a hyphen and number added to the original loan identifier to identify each occurrence. Borrower and property information is expected to be consistent across each row. Loan to value and debt to income data should be updated across all rows to reflect the new position. Information on identifying loan, borrower and property fields is available in the data tape.

In the case that the either the original loan or any further advances redeem before other loan parts, all loans should remain in the data tape, marked as performing (AR166 = 1) but with a zero current balance (AR67).

4.4.8: Multiple properties

Where there are multiple properties securing each loan, each property should be given a unique identifier (AR8) and row. Loan and borrower information will be the same across all the rows; only the property information will differ. Where individual property information is not available, please report the average across all properties. For example, where valuation amount is only available for a portfolio of properties, please take the loan-level valuation amount and divide it by the number of properties backing the loan.

The full list of property fields expected to change for each property row includes:

• AR128 – Geographic Region
• AR129 – Property Postcode
• AR131 – Property Type
• AR132 – New Property
• AR133 – Construction Year
• AR136 – Valuation Amount
• AR137 – Original Valuation Type
• AR138 – Valuation Date
• AR143 – Current Valuation
• AR144 – Current Valuation Type
• AR145 – Current Valuation Date
• AR154 – Gross Annual Rental Income
• AR162 – Current Energy Performance Certificate Value
• AR163 – Potential Energy Performance Certificate Value
• AR164 – Exemption from Energy Efficiency Regulation

4.4.9: Product switches

The treatment of loans subject to a product switch will depend on whether that loan is deemed to have been a) amended or b) redeemed with a new loan ID established.

If both the following conditions are met, product switches must be retained in the pool with the revised product details reported in the next data tape:

• account numbers remain the same; and
• borrowers and property are consistent with pre-switch.

While some fields (eg AR109 Current Interest Rate) will change, please do not amend any fields relating to characteristics at origination (eg AR66 Original Balance). AR136 Valuation Amount should also not be amended, unless a further advance has additionally been made (more information can be found in ‘4.4.5: Further advances’ on this page).

If these conditions are not met, then loans will need to be removed and treated in the same way as a redeemed loan (more information can be found in ‘4.4.4: Redeemed loans’ on this page), both in the weekly balance and data tape. If a counterparty wishes for the new loan to be pre-positioned in the pool, it should be added via a top-up.

As part of the periodic participant due diligence (detailed below), we will ask for confirmation whether product switches have resulted in loans in the pool that have been underwritten on terms and conditions that have not been through our legal due diligence. If new terms and conditions are present, we will require the participant to provide a blacklined version of the changes for review by our legal counsel. Where changes are deemed to be material, repeat legal due diligence may be required.

5: Weekly balance and data tapes

5.1: Weekly balance reporting for loans in arrears

Loans in arrears (of any length / magnitude) should be:

• included in the balances of residential mortgages, consumer loans, and auto loans pools
• excluded from the balances of all other asset classes. If loans return to performing, their balance should be reinstated

5.2: Weekly balance reporting for CLBLS, CBILS and BBLS in arrears

For loans under HM Treasury’s CLBLS, CBILS, and BBLS schemes only, loans in arrears can remain in the current balance if the government guarantee is still valid and has not been claimed. However, once these government-guaranteed loans default, they should be excluded from the current balance.

5.3: Incorrect weekly balance submission

If you accidentally submit an incorrect balance, please contact the Loans Data Team via LoansData@bankofengland.co.uk or by phone at +44 (0) 203 461 5909, who will outline what should be done.

5.4: Incorrect loan pool data tape submission

The system prevents duplicate loan pool submissions against the same Pool ID and cut-off date. Please contact the Loans Data Team via
LoansData@bankofengland.co.uk, who will be able to invalidate the previous loan pool data tape in order for you to submit the corrected pool tape.

6: Vintage curves

6.1: Producing vintage curves

When producing vintage curves you should include all book-level arrears data for all the product types pre-positioned as consumer loan pool(s), not just for the specific loans in the pool(s). You should complete separate submissions where pools contain different product types. Worked examples on producing vintage curves can be found below:

7: Loans Data Portal

7.1: Purpose

All sensitive data used during the due diligence process should be uploaded via our Loans Data Portal.

The Loans Data Portal functionality allows the upload of loan data tape(s) – requested during the pre-positioning process, and monthly thereafter – as well as weekly nominal balances. These uploads are directly linked to loan pool identifiers and can include any documents or data related to proposed pools.

We will not publicly disclose loan level data. We may publicly disclose data that has been aggregated and anonymised such that the loan level details cannot be determined. Further information can be found in the SMF T&Cs.^{footnote [1]}

For queries relating to the Loans Data Portal, including password resets or any other issues, contact LoansData@bankofengland.co.uk.

7.2: Gaining access to the Loans Data Portal

Access and user guidance is provided by our Loans Data team. It is your responsibility to ensure users retain access and remember log in details.

To set up access to the Loans Data Portal, you should complete and email the table below to our Loans Data team at
LoansData@bankofengland.co.uk. An existing access to the Loans Data Portal may be re-allocated, please include details of the replacement person and the licence to be re-allocated within the email to the Loans Data team. We use two-factor authentication so mobile numbers are needed to send users security authorisation codes. The last column is an email address to which validation emails will be sent (ie confirmation that data tape submissions have been received and passed validation checks), group email addresses can be used for this purpose, to ensure wider awareness.

A maximum of three users is permitted. This is to provide sufficient coverage to account for staff absence to ensure operational continuity. Further users are considered if there is sufficient rationale.

7.3: Uploading to the Loans Data Portal

All files should have relevant, clear, and descriptive names. No special characters should be used, and names should be kept as short as possible (eg the pool ID and the cut-off date, such as: ‘LOAN12345678 31032025’). Once files have been uploaded, they cannot be edited or deleted by you. All files are strictly confidential and only visible to us. Files are not to be password encrypted, as this can lead to the files not passing through our security and communications being lost.

7.4: Maximum data tape file size

Up to ten files with a maximum size of 150MB each can be uploaded per pool.

7.5: Supporting documents submission confirmation

There is no email confirmation for submission of supporting documents, please email your collateral contact, to make us aware that supporting documents have been uploaded.

7.6: Portal access issue

If you have tried logging in five times or more unsuccessfully your account will be locked. Please contact the Loans Data Team, who will raise this with our IT department on your behalf.

7.7: New/lost phone linked to Loans Data Portal account

If you have a new phone or lost your phone associated to your account, it is possible to switch. Please contact the Loans Data Team at
LoansData@bankofengland.co.uk.

8: Authorised signatories

When using loans as collateral you are required to sign documentation both at the point of pre-positioning and when encumbering/unencumbering loan collateral. The individuals allowed to do this on behalf of your organisation are detailed within an authorised signatory evidence form.

As a participant in the Sterling Monetary Framework, you are required to provide an authorised signatory evidence form and documentary evidence to support the authorised signatories. This form must be completed on behalf of your organisation and responsibility is with you to keep this up to date and inform us of any updates or amendments in a timely and efficient manner.

To update the authorised signatory evidence form, please complete our proforma. Evidence of authority and specimen signatures are required for the individual(s) signing off the form. We encourage you to read our guidance note on supporting evidence. Please submit your signatory form and/or any questions to our Sterling Markets Division at applications@bankofengland.co.uk.