The ""Federal Home Loan Bank of Chicago"":http://www.fhlbc.com/Pages/default.aspx is teaming up with Ginnie Mae to provide member institutions with easy access to the secondary market through the ""Mortgage Partnership Finance (MPF)"":http://www.fhlbmpf.com/ program.
[IMAGE]Members of the Federal Home Loan Bank of Chicago can sell their fixed-rate, conventional conforming loans to the secondary market with backing by ""Ginnie Mae."":http://www.ginniemae.gov/pages/default.aspx
""This product will allow participating members to be more competitive in their communities and to provide them better pricing to enhance access to affordable mortgage financing in the communities they serve,"" said Matt Feldman, president of the Federal Home Loan Bank of Chicago.
[COLUMN_BREAK]The program is especially helpful to small lenders that do not currently have direct access to the secondary market.
With approval from the ""Federal Housing Finance Agency,"":http://www.fhfa.gov/ the Federal Home Loan Bank of Chicago is now permitted to purchase government-insured loans, pool them into securities with Ginnie Mae guarantees, and sell the mortgage-backed securities (MBS) to investors.
""The Ginnie Mae and FHLB Chicago partnership leverages the strengths of each of the institutions and will facilitate FHA [Federal Housing Administration], VA [Department of Veterans Affairs], and RD [Rural Development] lending by small banks, some of whom are operating in areas where borrowers have had limited access to government loan programs,"" said Ted Tozer, president of Ginnie Mae, which currently guarantees $1.4 trillion MBS.
The MPF program is already active through Federal Home Loan Banks in Boston, Dallas, Des Moines, New York, Pittsburgh, Seattle, and Topeka.
While the product will initially be limited to member institutions--located in Illinois and Wisconsin--the Federal Home Loan Bank of Chicago plans to expand the program next year.
""This effort is an important move toward satisfying a critical strategic initiative of Ginnie Mae to find a way to expand access to our program to small lenders,"" Tozer said.