Together with Ginnie Mae, the Mortgage Partnership Finance Program,a group of Federal Home Loan Banks formed to sell fixed-rate mortgage loans into the secondary market, announced an expanded loan offering that will allow the program’s participants to execute a servicing-released mortgage sale to Ginnie Mae.
The MPF government mortgage-backed security product now features a servicing-released option from Nationstar Mortgage in addition to the already existing servicing-retained execution.
Through the MPF Government MBS product, the MPF Program purchases 30-year and 15-year fixed-rate mortgage loans originated by participating Federal Home Loan Bank members that are insured or guaranteed by the following government agencies: the Federal Housing Administration, the Department of Veterans Affairs, and the Department of Agriculture through its RHS Section 502 loan program.
The MPF Program issues securities guaranteed by Ginnie Mae backed by these government mortgages.
According to the Mortgage Partnership Finance Program and Ginnie Mae, this option provides greater flexibility for local community lenders that want to originate and sell their government loans into the secondary market.
Additionally, the product is available to lenders in more communities from coast to coast, MPF and Ginnie Mae said.
The FHLB Atlanta, FHLB Boston, and FHLB Des Moines have been approved to offer the MPF Government MBS product.
Those three Federal Home Loan Banks join the FHLB Chicago, a Ginnie Mae Issuer offering the MPF Government MBS product.
“The addition of the servicing released option will appeal to community lenders across the country, “said Matt Feldman, President of the Federal Home Loan Bank of Chicago, which operates the MPF Program on behalf of nine Federal Home Loan Banks.
“They can now receive the benefit of securities pricing with whatever size mortgage volumes they generate,” Feldman continued. “These exciting developments mean more FHLBank members can become more competitive as they support homeownership in their communities.”
Ginnie Mae President Ted Tozer said Ginnie Mae welcomes the development because it means that more consumers in more areas will benefit. “This is directly in line with the mission of Ginnie Mae, which is to make sure that as many lenders as possible, regardless of their size, can access the capital markets, which in turn provides the credit access that is the foundation of the American mortgage finance market,” Tozer said.
Several industry groups stated that they too welcome the new program.
Robert Davis, Executive Vice President at the American Bankers Association, said that community banks are drawn to the MPF program because it gives them liquidity options and attractive pricing to better serve their customers.
“The original partnership between MPF and Ginnie Mae expanded the options for banks to better meet their customers’ needs, and the further addition of a servicing released option for government guaranteed loans will give banks greater flexibility at a time when new capital rules are making retained servicing more costly and difficult,” Davis said. “Both MPF and Ginnie Mae are to be commended for these innovations.”
Ryan Donovan, chief advocacy officer for the Credit Union National Association, said that 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.
“We welcome and applaud the expansion of the MPF program as a positive development that should help facilitate additional credit union mortgage lending, ensuring that even more Americans will have access to affordable mortgage credit,” Donovan said.
Ron Haynie, senior vice president of mortgage finance policy for the Independent Community Bankers of America, said that the new servicing-released option will provide community bank lenders better price execution on their sale of loans into the MPF Government MBS Program, which should make the program more competitive.
“Most community banks sell their government loans servicing released, making this program a better fit for their business model, and allows them to sell their government loans to an aggregator that does not compete with them in mortgage originations or banking business,” Haynie said.
Carrie Hunt, senior vice president of government affairs & general counsel at the National Association of Federal Credit Unions, said that NAFCU’s members welcome the expanded offering 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,” Hunt said. “We appreciate the leadership at the Atlanta, Boston, Chicago, and Des Moines FHLBs in finding ways to improve the liquidity access and flexibility for credit unions. Ultimately, this will help credit union members and by extension, the communities they serve.”