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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% |
| 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 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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