Frequently Asked Questions

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Using MPF Successfully

Using the Secondary Market

An Educational Game To Help Members Crack the Secondary Market

MPF Internet Workshops

October 2008

October 6: Understanding and Reviewing Appraisals

October 9: eMPF Transaction Training

October 16: Anti-Predatory Lending Issues and Concerns

October 21: Underwriting Workshop.pdf

October 22: Credit Report Review

November 2008

November 3: Detecting and Avoiding Fraud

November 4: Investor Reporting

November 18: Construction-to-Perm Mortgages

November 20: Turnaround Report (TAR) and Account Reconciliation

December 2008

December 2 and 8: Delinquency Management Workshops

December 4: Accounting and Regulatory Guidance for MPF - FFIEC Regulated Institutions

December 5: Accounting and Regulatory Guidance for MPF - OTS Regulated Institutions

December 8: Accounting and Regulatory Guidance for MPF - NCUA Regulated Institutions

December 9: Underwriting Workshop

Credit Products
  Specials
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  Mortgage Partnership Finance
   
 
 
 
 
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  Products Policy
MPF® 125

Printable Version

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 MPF 125, the risks associated with home mortgage finance are shared with the Federal Home Loan Bank (FHLB) to maximize comparative advantages. With MPF 125, 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 MPF 125?
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

Would you value the economic advantages of selling your mortgage assets while retaining your customer relationships and servicing cash flow streams?

FEATURES OF MPF 125
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 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 7-10 bps paid on outstanding master commitment balance; adjusted for loan losses

Under MPF 125, 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) which is 100 bps of the delivered amount. 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's minimum CE Obligation is 25 bps based on delivered amount. The member is paid a performance-based credit
enhancement fee for providing the CE Obligation.

Depository institution members participating in MPF 125 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 MPF 125 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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