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MPF® Plus allows lenders to effectively compete
on price with other mortgage lenders based upon the
credit quality of their loans.
Summary of Benefits
- Competitive Execution
- Credit enhancement fee income
- Closed loan delivery flexibility
- Servicing fee income
- Servicing released options available
- Electronic processing through the eMPF® website
The structure of MPF Plus allows members added flexibility
in delivering closed loans to the FHLB through the addition
of supplemental mortgage insurance (SMI) coverage from
an approved mortgage insurance (MI) company.
Who would benefit from MPF Plus?
MPF Plus is attractive to members who typically sell
their closed loan products to the secondary market,
as it provides an alternative when they are deciding
on the "best execution" for delivering mortgage
loans. MPF Plus would benefit any member actively engaged
in mortgage lending that:
- Values the income derived from originating and servicing
loans
- Is currently a member of a participating FHLB
- Is accustomed to delivering closed loans
Through the addition of SMI coverage, MPF Plus offers
excellent risk-based capital treatment with favorable
income and profitability.
Would you value the economic
advantages of selling your mortgage assets while retaining
your customer relationships and servicing cash flow
streams?
| FEATURES
OF MPF PLUS |
| Term |
Up to 30 years fully amortizing |
| Maximum LTV |
95% |
| FICO score |
620 minimum |
| Loan Limits |
Agency conforming |
| Occupancy |
Owner occupied (1-4 units) and second
homes |
| Property Type |
All types (except co-ops and investment) |
| Underwriting |
Follow MPF Origination guidelines
(LP/DU decisions considered) |
| Remittance |
Scheduled/Scheduled |
| Master commitment size |
$100 million minimum, optional delivery |
| Delivery commitment |
3, 10, 20, 30, and 45 business days,
mandatory delivery |
| Pricing |
Premium and discount pricing available |
| Credit enhancement fee |
Includes a fixed and a performance
fee paid monthly |
| Supplemental MI Policy |
Negotiated between the member and
an approved MI Company (coverage requirements set
by FHLB) |
Under MPF Plus, the first layer of losses (following
any primary MI coverage) is paid by the FHLB up to the
amount of the First Loss Account (FLA) equal to a specified
percentage of the loans in the pool as of the sale date.
The member procures additional credit enhancement (CE)
in the form of an SMI policy to cover the second layer
of losses that exceed the deductible (initially equal
to the FLA) on the SMI Policy. Losses on the pool of
loans not covered by the FLA and the SMI coverage are
paid by the member, up to the amount of the member's
CE Obligation, if any, for the Master Commitment. The
total CE for the pool of loans in a Master Commitment
is set so as to achieve an "AA" rated credit
level.
Every month, the member is paid a CE Fee for providing
a CE Obligation. The fee is split into fixed and performance
fees. The fixed CE Fee is paid beginning with the month
after delivery. The performance CE Fees, which are adjusted
for loan losses, accrue and are paid monthly, commencing
with the 13th month following each delivery of loans.
The FHLB absorbs all losses in excess of the SMI coverage
and the member's CE Obligation. For depository
institution members, the risk-based capital requirement
is equal to 100% of the member's CE Obligation. There
is zero leverage capital required.
The MPF Program is not providing accounting
or legal advice with respect to the accounting treatment
of MPF Program assets and liabilities. The participating member is expected to consult with its own accountants
and attorneys for advice on this matter.
"MPF," "Mortgage Partnership Finance," "eMPF," and "MPF Xtra" are registered trademarks of the Federal Home Loan Bank of Chicago.
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