MPF Program Partners With USDA Rural Development
The Federal Home Loan Banks' Mortgage Partnership Finance Program announced a new partnership with the USDA Rural Development program on Tuesday. Under this new arrangement, approved Home Loan Banks participating in the MPF Program can now purchase RHS Section 502 government-guaranteed loans from qualified members, including commercial banks, thrifts, credit unions, and insurance companies. USDA Rural Development Guaranteed Loans are offered to qualifying low- and moderate-income families to purchase or refinance homes in rural areas with a population of less than 10,000 and "non-metro" communities with populations between 10,000 and 25,000. With this announcement, two Home Loan Banks that participate in the MPF Program have the ability to purchase these types of government loans from their members as a competitive alternative to the secondary mortgage market: the Federal Home Loan Bank of Chicago, serving members in Illinois and Wisconsin, and the Federal Home Loan Bank of Pittsburgh, serving members in Pennsylvania, Delaware, and West Virginia. Members of Federal Home Loan Banks that participate in the MPF Program retain the relationship with their borrowers and manage the credit risk of the loans they originate. The Federal Home Loan Banks manage the liquidity, interest rate, and prepayment risks associated with the loans. "The MPF Program has been innovative since its inception 10 years ago," said Eric Schambow, senior vice president of the Mortgage Partnership Finance Program. "This partnership with USDA Rural Development continues the program's tradition of offering products that help members meet the specific needs of the borrowers in their local communities." For more information about the MPF Program, visit the website http://www.fhlbmpf.com.