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FHLBank Mortgage Programs
The Federal Home Loan Banks (FHLBanks) offer two mortgage products to their members: the Mortgage Partnership Finance Program (MPF) and the Mortgage Purchase Program (MPP). Mortgage programs have been a part of the FHLBank System since 1997 and are another way the FHLBanks provide liquidity to their members. These programs provide competitive alternatives to members of the FHLBanks that sell conventional and FHA mortgages into the secondary market. In addition, the FHLBank Mortgage Programs offer members that can not participate in the secondary market because of their small size their only opportunity to access the benefits of the secondary mortgage market.
FHLBank mortgage programs tap the respective strengths of each institution: The FHLBanks manage the interest rate, prepayment, and liquidity risks, while member financial institutions manage the customer relationship, the credit risk and the servicing of mortgage loans. Under the FHLBank mortgage programs member financial institutions do not have to pay costly guarantee fees to a secondary market agency.
The Mortgage Partnership Finance (MPF™) program, pioneered by the FHLBank of Chicago, is offered by nine other FHLBanks (Topeka, Atlanta, Boston, Dallas, Des Moines, New York, Pittsburgh and San Francisco). The Mortgage Purchase Program (MPP) was jointly developed by and is offered by the FHLBanks of Atlanta (also an MPF bank), Cincinnati, Indianapolis and Seattle. Although program details vary, in general, both programs enable member financial institutions to sell mortgage loans to an FHLBank as an alternative to securitization.
As of December 31, 2006, the FHLBanks member mortgage assets totaled $98 billion, and MPF and MPP loans were distributed throughout all fifty states and the District of Columbia.
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