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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.
"Mortgage Partnership Finance" and "MPF"
are registered trademarks of the Federal Home Loan Bank of Chicago.
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