Chicago and Washington, D.C., July 21, 2015 – The Mortgage Partnership Finance® (MPF) Program today announced that it had issued its first security guaranteed by the Government National Mortgage Association (Ginnie 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, which 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.”
“Community lenders are uniquely situated to fulfill the hopes and dreams of everyday families,” said U.S. Department of Housing and Urban Development Secretary Julián Castro. “Ginnie Mae is committed to providing our local partners with the resources they need to expand housing opportunity for all Americans.”
“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,” said Ginnie Mae President Ted Tozer. “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.
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.
What the Industry is Saying About the MPF Program
American Bankers Association: “ABA applauds this innovative collaboration between Ginnie Mae and the MPF Program,” said Bob Davis, Executive Vice President for the American Bankers Association. “Ginnie Mae securitization of certain MPF loans will greatly enhance the effectiveness of mortgage consolidation activities by the FHLB System, reducing capital costs and providing more competitive pricing to consumers. Early leadership at the Chicago and Atlanta FHLBs is improving liquidity access for community banks in a meaningful way that will benefit the borrowers and communities they serve.”
Credit Union National Association (CUNA): “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 the Credit Union National Association (CUNA). “CUNA applauds this innovative new product from Ginnie Mae and looks forward to watching it expand to FHLBs around the country."
Independent Community Bankers of America: “This new access point to the secondary market for community banks that originate and sell FHA, VA, and RHS mortgages will help them better meet the needs of their customers,” commented Ron Haynie, SVP of Mortgage Finance Policy for the Independent Community Bankers of America. “Many community banks use the FHLB MPF Program to sell conventional mortgages into the secondary market. This expansion into aggregating and securitizing government loans provides community banks with the opportunity to reach more borrowers, especially in rural and small town markets, and to safely sell those loans to an aggregator that does not compete with them in the banking business. We look forward to working with Ginnie Mae and the FHLBs as they expand this product.”
Mortgage Bankers Association (MBA): “This is a good model for how the FHLB System can partner with industry,” said Mortgage Bankers Association President and CEO Dave Stevens. “It is important to continue to create new opportunities which enhance access for all lenders so that they can utilize the capital markets directly, reducing costs and increasing originations.”
National Association of Federal Credit Unions: “NAFCU appreciates this new cooperative program between Ginnie Mae and the MPF Program,” said Carrie Hunt, Senior Vice President & General Counsel. “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.”
About the MPF Program
The MPF Program allows participating members of the Federal Home Loan Bank System to sell fixed-rate, conventional loans into the secondary mortgage market. To participate in the MPF Program, a financial institution must be a member of a Federal Home Loan Bank that offers the MPF Program. Currently, new loan purchases are available through the following Federal Home Loan Banks: Atlanta, Boston, Chicago, Dallas, Des Moines, New York, Pittsburgh, Topeka, and San Francisco. To learn more about the MPF Program, visit its website, www.fhlbmpf.com. “Mortgage Partnership Finance” and “MPF” are registered trademarks of the Federal Home Loan Bank of Chicago.
About Ginnie Mae
Ginnie Mae is a wholly-owned government corporation within the U.S. Department of Housing and Urban Development. Ginnie Mae raises capital from investors in the global credit markets to ensure liquidity for affordable rental and homeownership opportunities across the country. Through its MBS, Ginnie Mae finances housing mortgage insurance programs run by the Federal Housing Administration (FHA), the Department of Veterans Affairs (VA), the Office of Public and Indian Housing (PIH), and the Department of Agriculture’s Rural Development Housing and Community Facilities Program (RD).
###