CHICAGO and WASHINGTON–The Mortgage Partnership Finance Program announced it has issued its first security guaranteed by the Government National Mortgage Association (Ginne Mae). The $5-million security is backed by mortgages originated by community lenders through the MPF Government MBS product.
“This is an important milestone for the MPF Program,” said Matt Feldman, president of the Federal Home Loan Bank of Chicago, in a statement. The FHLB-Chicago operates the MPF Program on behalf of nine Federal Home Loan Banks. “Ginnies are among the most liquid financial instruments in the world, and this new product allows us to enable FHLBank members to offer competitive FHA, VA, and Government Guaranteed Native American and Rural Housing mortgages.”
Ginne Mae President Ted Tozer added, “This agreement is a great example of how the Ginnie Mae MBS program continues to level the playing field by allowing community based financial institutions to effectively compete with mega banks for homebuyers in their communities. Now they can connect directly to the capital markets, improving the home financing options they can offer to their customers without the burden of having to individually obtain and maintain Ginnie Mae approval.
“Looked at another way, it allows Ginnie Mae to distribute its program more broadly without dramatically increasing the number of counterparties we must manage. In this sense, it is a model for how Ginnie Mae should operate in the future,” Tozer noted.
Through the MPF Government MBS product, the MPF Program purchases fixed-rate mortgage loans originated by Federal Home Loan Bank members that are insured or guaranteed by the following government agencies: FHA, VA, USDA through its RHS Section 502 loan program, and HUD through its Section184 loan program. MPF Government MBS provides participating community lenders competitive pricing, which they can pass on to their borrowers.
Who is Eligible
MPF Government MBS is currently available to eligible participating members of the Federal Home Loan Bank of Chicago, which serves financial institutions in Illinois and Wisconsin. Other Federal Home Loan Banks are in various stages of considering offering the MPF Government MBS product; the Federal Home Loan Bank of Atlanta has already received approval to offer it and has begun piloting it in their district. The FHLBank Atlanta serves financial institutions in Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and Washington D.C.
The initial securitization is comprised of a mix of loans, with more than 50% in the RHS category. VA loans make up the next largest issuance and FHA rounds out the balance. The MPF Program anticipates incremental growth in all categories as additional FHLBanks begin offering the product.
Ginnie Mae guarantees more than $1.5 trillion of mortgage-backed securities and the vast majority of government loans are placed in Ginnie Mae MBS. Access to the Ginnie Mae program is critical for government loan originators.
Allows for Better Service to Members
“Credit unions are leaders in FHA, VA, and RHS lending, and access to additional liquidity on affordable terms will allow them to better serve their members,” said Ryan Donovan, chief advocacy officer for CUNA. “CUNA applauds this innovative new product from Ginnie Mae and looks forward to watching it expand to FHLBs around the country."
Added NAFCU’s SVP-General Counsel Carrie Hunt,“NAFCU appreciates this new cooperative program between Ginnie Mae and the MPF Program. Ginnie Mae’s securitization of certain MPF loans will assist in reducing costs across the mortgage finance process. We also appreciate the leadership at the Atlanta and Chicago FHLBs in finding ways to improve the liquidity access for credit unions. In turn, this will help credit union members and, ultimately, the communities they serve.”
For info: www.fhlbmpf.com.