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The MPF® Program provides an alternative to holding fixed rate loans
in portfolio, creating additional liquidity opportunities for participating
financial institutions (PFIs). With the MPF Xtra product, PFIs are able to sell fixed-rate conforming loans into the secondary market, leveraging their FHLB membership to gain access to liquidity. PFIs can use the MPF Xtra product to:
- Offer fixed-rate residential mortgage loans to their borrowers and deliver those loans
into the secondary market;
- Retain the servicing rights and servicing-fee income, preserving the ability to cultivate
relationships with customers; and,
- Transfer the interest rate and prepayment risks as well as the credit risk of the associated loans to an investor.
Because the PFI does not retain credit risk for loans sold under the MPF Xtra product structure, there are no risk-based capital or credit-risk collateral requirements for the PFI. Additionally, for depository institution members, there is no leverage capital requirement.
The MPF Xtra product offers PFIs an attractive alternative for selling first mortgage loans they originate, allowing them to take advantage of a product designed to transfer loan risks to the investor.
| FEATURES
OF MPF XTRA |
| Term |
Up to 30 years fully amortizing |
| Maximum LTV |
95% |
| FICO score |
580 minimum |
| Loan limits |
Agency conforming, conventional only |
| Occupancy |
Owner occupied (1-4 units) and second homes |
| Property type |
All types except co-ops and non-owner occupied |
| Underwriting |
Follow MPF Origination Guide and MPF Xtra Manual |
| Commitment delivery |
3, 10, 20, 30, and 45 business days |
| Pricing |
Premium and discount pricing available |
| Remittance |
Actual/Actual, according to the MPF Xtra Manual |
| Servicing |
25 bps, follow the MPF Servicing Guide and MPF Xtra Manual |
| Master commitment size |
$5 million minimum, best efforts |
Who should take advantage of this product?
The MPF Xtra product is designed for any participating FHLB member that is actively engaged in mortgage lending in their community, seeks to minimize risk, and has a high regard for the value of the customer relationship. With this product, members gain access to secondary market liquidity, minimize the interest rate and prepayment risk, and transfer the credit risk to the investor. The originating member institution can retain the servicing rights and the associated, valuable customer relationship.
Summary of Benefits
- Competitive execution
- Retain valuable servicing
fee income and borrower
relationships
- Economic value for quality
loans
- Electronic processing
through the eMPF® website
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.
“Mortgage Partnership Finance,” “MPF,” "MPF Xtra," and “eMPF” are registered trademarks of the Federal Home Loan Bank of Chicago.
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