MPF® Program Partners with USDA Rural Development
|May 14, 2007|
Chicago, Ill. – The Federal Home Loan Banks’ Mortgage Partnership Finance® Program announced today a new partnership with the USDA Rural Development program. 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. These members include 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.
Guaranteed loans offer many benefits to buyers such as zero down payment, no monthly insurance, and flexible credit guidelines. 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. 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,” says Eric S. Schambow, Senior Vice President, Mortgage Partnership Finance Program.