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The MPF® Program provides an alternative to holding
fixed-rate loans in portfolio or selling them to the
secondary market.
Summary of Benefits
- Competitive Execution
- Credit enhancement fee income paid monthly
- Economic value for quality loans
- Same day funding
- Closed loan delivery flexibility
- Servicing fee income
- Servicing released options available
- Electronic processing through the eMPF® website
Under Original MPF, the risks associated with home
mortgage finance are shared with the Federal Home Loan
Bank (FHLB) to maximize comparative advantages. With
Original MPF, members can market and service fixed-rate,
residential mortgage loans - and instead of getting
charged a fee by the secondary market investor, members
receive a fee for their credit expertise. The FHLB
manages the liquidity, interest rate, and prepayment
risks of the loans while the member manages the credit
risk of the loans.
Who would benefit from Original
MPF?
Any institution actively engaged in mortgage lending
that:
- Values the income derived from originating and servicing
loans
- Is currently a member of a participating FHLB
Would you value the economic
advantages of selling your mortgage assets while retaining
your customer relationships and servicing cash flow
streams?
| FEATURES
OF ORIGINAL MPF |
| Term |
Up to 30 years fully amortizing |
| Maximum LTV |
95% |
| 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 Guide guidelines
(LP/DU decisions considered) |
| Remittance |
Actual/Actual, Actual/Actual Single
Remittance, Scheduled/Scheduled |
| Master commitment size |
$5 million minimum, optional delivery |
| Delivery commitment |
3, 10, 20, 30, and 45 business days,
mandatory delivery |
| Pricing |
Premium & discount pricing available |
| Credit enhancement fee |
Typically 10 bps paid on outstanding
master commitment balance |
With Original MPF, the first layer of losses for each
Master Commitment (following any primary MI coverage)
is paid by the FHLB up to the amount of the First Loss
Account (FLA) in the amount of 4 bps per year. The member
then provides a second loss credit enhancement obligation
(CE Obligation) for each Master Commitment. Loan losses
beyond the first and second layers are absorbed by the
FHLB. The member is paid a fixed Credit Enhancement
Fee for providing the CE Obligation.
Depository institution members participating in Original
MPF must hold risk-based capital equal to 100% of their
CE Obligation, or 4% of the unpaid principal balance
of the loans in their Master Commitment, whichever is
lower. There is no leverage capital requirement for
loans sold under the Original MPF product.*
* The FHLB is not providing accounting
or legal advice with respect to the accounting treatment
of MPF Program asset 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," are registered trademarks and "MPF Xtra" is a trademark of the Federal Home Loan Bank of Chicago.
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