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Community banks, thrifts, and credit unions all over the U.S. are teaming up with FHLBanks to access the secondary market. In turn, time-tested MPF products provide mortgage lenders the loan selling structures that best fit their needs.
MPF products and features are outlined below.
Credit Enhanced Products
The MPF Original product allows a member to share the credit risk associated with home mortgage finance with its Federal Home Loan Bank. MPF Original provides Participating Financial Institutions with the ability to originate, sell, and service fixed-rate, residential mortgage loans, and receive a Credit Enhancement Fee. The FHLBank manages the liquidity, interest rate, and prepayment risks of the loans while the PFI manages the credit risk of the loans. The credit risk sharing feature of MPF Original allocates future loan losses, if any, between the PFI and its FHLBank after borrower equity and private mortgage insurance are depleted.
• Remittance options: Actual/Actual, Actual/Actual Single Remittance, Scheduled/Scheduled
• Credit Enhancement Fees: For taking on the Credit Enhancement Obligation, the PFI will receive a fixed fee of up to 10 basis points annualized on the outstanding Master Commitment balances, paid monthly
• Competitive execution
• Credit Enhancement Fee income, paid monthly
• Economic reward for quality loans
• Same-day delivery and funding
• Servicing released options available
• No secondary market fees
The MPF 125 product allows a member to share the credit risk associated with home mortgage finance with its Federal Home Loan Bank. MPF 125 provides Participating Financial Institutions with the ability to originate, sell, and service fixed-rate, residential mortgage loans, and receive a Credit Enhancement Fee based on the performance of the loans. The FHLBank manages the liquidity, interest rate, and prepayment risks of the loans while the PFI manages the credit risk of the loans. The credit risk-sharing feature of MPF 125 allocates future loan losses, if any, between the PFI and its FHLBank after equity and private mortgage insurance are depleted.
• Credit Enhancement Fees: For taking on the CE Obligation, the PFI will receive up to 10 basis points annualized on the outstanding Master Commitment balances, paid monthly. This fee is performance-based, net of any realized losses.
The MPF 35 product allows you to share the risks associated with home mortgage finance with your Federal Home Loan Bank (FHLBank). MPF 35 offers you, a Participating Financial Institution (PFI) the ability to originate, sell and service fixed-rate, conventional residential mortgage loans and receive a credit enhancement fee for your credit expertise. Your FHLBank manages the liquidity, interest rate, and prepayment risks of the loans while you manage the credit risk of the loans. The credit risk sharing feature of MPF 35 allocates any future loan losses, after equity and private mortgage insurance are depleted, between the PFI and its FHLBank.
Credit Enhancement Fees: A mutually agreed upon amount ranging from 7 basis points (0.07%) up to 14 basis points (0.14%) annualized on the outstanding Master Commitment balances made up of two components:
• A fixed rate portion paid monthly beginning the month after delivery; and• A performance-based portion paid monthly beginning the 13th month after delivery after deducting any losses (up to the amount of the First Loss Account)• Remittance Options: Actual/Actual, Actual/Actual Single Remittance, and Scheduled/Scheduled• Servicing Fees: 25 basis points (0.25%) paid monthly
• Competitive execution• Economic reward for quality loans• Same-day delivery and funding• Servicing released options available• No loan-level price adjustments
Non-Credit Enhanced Products
Through the MPF Xtra product, Participating Financial Institutions are able to leverage their membership in their Federal Home Loan Bank and access its low-cost options to sell fixed-rate, conforming loans into the secondary market.
PFIs that take advantage of the MPF Xtra product have the flexibility to:
• Offer fixed-rate residential mortgage loans to their borrowers and deliver those loans into the secondary market• Retain or sell the servicing rights and servicing fee income. Under either option, PFIs preserve the ability to cultivate and maintain relationships with customers• Transfer the interest-rate and prepayment risks as well as the credit risk of the associated loans to an investorSince the PFI does not retain the credit risk in loans sold under the MPF Xtra product, there are no collateral or risk-based capital requirements.
Who Should Take Advantage of This Product?
The MPF Xtra product is for any PFI that is actively engaged in mortgage lending in its community and has a high regard for the value of customer relationships. PFIs gain access to secondary market liquidity, minimize their interest-rate and prepayment risks, and transfer the credit risk of the loans to the investor. The originating PFI can retain or sell the servicing rights and in either case retain the associated valuable borrower relationships.
Access to Desktop Underwriter®
PFIs can obtain access to Fannie Mae's Desktop Underwriter (DU®) and take advantage of its state-of-the-art technology. The use of DU may result in limited waivers of certain PFI loan origination representations and warrants including the mortgage loan's eligibility for delivery and the borrower's creditworthiness, provided that certain conditions are met. As a PFI selling the MPF Xtra product, you will not incur the cost of the typical DU implementation fee. You only pay a reduced transaction fee, a significant savings and market advantage.
• Competitive execution• Economic value for quality loans• Retention of borrower relationships• Access to Desktop Underwriter
Best Efforts Delivery Commitment
Best Efforts Delivery Commitments are available under the MPF Xtra® product. Federal Home Loan Bank (FHLBank) PFIs are able to take advantage of the MPF Xtra product, which offers:
• The transfer of interest-rate prepayment risks as well as the credit risk of the associated loans to an investor• Delivery Commitments under a Best Efforts option for individual loans, with no pair-off fees for non-delivery• The ability to originate fixed-rate residential mortgage loans and delivery of those loans into the seconadry market • Retention of the servicing rights and servicing fee income, preserving the ability to cultivate and maintain relationships with customers• No collateral or risk-based capital requirements*
Who Should Take Advantage of this Option?
MPF Xtra Best Efforts Delivery Commitments are for any PFI that is actively engaged in mortgage lending in its community, has a high regard for the value of customer relationships, and seeks to more effectively manage its origination pipeline. If the associated loan closes, the PFI must deliver that loan under the Delivery Commitment; however, there is no pair-off fee assessed if the loan does not close and the Delivery Commitment expires. PFIs gain greater access to secondary market liquidity and minimize the associated interest rate risk due to market changes.
PFIs will continue to have the option of manually underwriting the loans or obtain access to Fannie Mae's Desktop Underwriter® (DU®) taking advantage of state-of-the-art technology. Utilizing DU reduces a PFI's loan origination representations and warrants to the investor.
• Receive a competitive execution with delivery flexibility• Enhance pipeline management tools • Reduce exposure to interest rate fluctuations• Realize economic value for quality loans
*The FHLBanks do not provide accounting or legal advice with respect to the accounting treatment of MPF® Program assets and liabilities. The participating member is expected to consult with its own accountants and attorneys for advice on this matter.
MPF Direct is a jumbo loan product that partners the MPF Program with Redwood Trust, Inc., a real estate investment trust located in Mill Valley, CA. This unique partnership offers Federal Home Loan Bank Participating Financial Institutions (PFIs) the opportunity to access private capital when they sell their fixed-rate mortgages into the secondary market, leveraging their FHLBank membership to obtain liquidity for loans up to $2.5 million.
The MPF Direct product benefits PFIs that want to:
• Offer competitive fixed-rate and 5/1,7/1, 10/1 hybrid ARM, jumbo residential mortgage loans to their borrowers without metropolitan statistical area (MSA) restrictions• Sell the servicing rights• Receive attractive all-in pricing (asset price + servicing-released premium)• Continue the ability to cultivate and/or maintain relationships with their customers and• Transfer the interest rate and credit risks of the jumbo loan to an investor
With no retained credit risk on loans sold under the MPF Direct product structure, PFIs have no risk-based capital or credit risk collateral requirements.*
Features of the MPF Direct product are:
• Maximum LTV: 90%• Loan Limits: Up to $2.5 million; • Occupancy: Owner-occupied, second homes, and non-owner occupied• Property Type: 1 to 4 units• Delivery Commitment: Best Efforts• Remittance: Servicing Released only• Master Commitment Size: $10 million minimum
PFIs that want the advantages of the MPF Direct product must obtain specific product approval through their FHLBank. Contact your FHLBank representative for more information.
*The FHLBanks do not provide accounting or legal advice with respect to the accounting treatment of MPF Program assets and liabilities. The participating member is expected to consult with its own accountants and attorneys on this matter.
The MPF Government product allows Participating Financial Institutions to sell fixed-rate mortgage loans that are insured or guaranteed by government agencies to their local Federal Home Loan Bank. The loan programs that can be sold under the MPF Government product include:
• FHA – low down payment options for borrowers• VA – financing and down payment flexibility for military veterans• RD Section 502 – flexible financing for borrowers in rural and agricultural areas• HUD Section 184 – affordable and flexible financing for borrowers on Indian-Native American land
The MPF Government product offers PFIs the flexibility to retain the servicing of loans sold to their FHLBanks or take advantage of our servicing released option. When choosing the servicing released option, a PFI sells the servicing to an approved MPF servicing aggregator and receives a competitive servicing released premium.
The MPF Government Product Benefits PFIs That:
• Want a competitively priced government loan investor• Want to fund loans more quickly and easily• Are approved by the applicable government agency to originate and service loans• Want a variety of mortgage loan options to meet the needs of their customers• Appreciate having maximum flexibility in choosing their servicing and remittance option
How It Works
The FHLBanks are able to offer PFIs competitive mortgage products and pricing through the MPF Program as a benefit of membership. When you sell government loans to your FHLBank, the FHLBank manages the liquidity, interest rate, and prepayment risks of the loans. As a PFI, you can choose to retain servicing, which includes potential unreimbursed servicing expenses, or sell the servicing to an approved MPF servicing aggregator and receive a servicing released premium. By combining our competitive pricing and your servicing expertise (or the servicing released premium option), you are able to offer your customers access to the best mortgage products in the marketplace today.
• Competitive servicing retained execution • Excellent servicing released execution • All-In Execution = Asset Price + Servicing Released Premium• Same-day loan delivery and funding • Depository institutions have no risk-based capital requirements for loans sold under the MPF Government product
MPF® Government MBS
MPF Government MBS is an MPF Program government loan product whereby the Federal Home Loan Bank of Chicago purchases government loans from eligible Participating Financial Institutions (PFIs). The purchased loans will be aggregated and pooled into securities guaranteed by the Government National Mortgage Association (Ginnie Mae). Loans that qualify under this product are fixed-rate mortgage loans insured or guaranteed by the following government agencies:
• FHA Low down payment options• VA Financing and down payment flexibility for military veterans• RHS Section 502 Flexible financing for borrowers in rural and agricultural areas
How It Works
The Mortgage Partnership Finance® Program offers PFIs competitive government mortgage products and pricing as a benefit to membership in their FHLBank. You can choose to retain servicing or sell the servicing and receive a servicing released premium. PFIs retaining servicing continue to report and remit payments as they currently do under the MPF Program – the Federal Home Loan Bank of Chicago is responsible for monthly reporting to Ginnie Mae.
PFIs are required to obtain a master commitment specifically for the MPF Government MBS in order to participate in this product. You would underwrite loans in accordance with applicable government agency guidelines. Our competitive pricing and your servicing expertise (or the servicing released option), allows you to offer your customers access to the best mortgage products in the marketplace today.
If choosing the servicing released option, you would sell the servicing to an approved MPF servicing aggregator and receive a competitive servicing released premium. Competitive pricing and servicing options distinguishes the MPF Government MBS product as a viable alternative to other secondary market outlets.
The MPF Government MBS Product Benefits PFIs That:
• Are looking for a competitively priced government loan investor• Are approved by the applicable government agency to originate and service loans• Want a variety of mortgage loan options to meet the needs of their customers• Have experience servicing with scheduled/scheduled remittance or sells servicing to an approved MPF servicer
• Cash execution – securities pricing• Competitive servicing retained execution• Excellent servicing released execution • All-in execution = Asset Price + SRP • Same-day loan delivery and funding• Depository institutions have no leverage capital or risk-based capital requirements for loans sold under the MPF Government MBS product
Actual/Actual Remittance features an investor reporting and remittance option similar to agency actual/actual and a competitive up-front price. This option is structured so that Participating Financial Institutions transfer funds to their MPF Bank non-interest bearing custodial deposit account whenever the collected principal and interest net of servicing fees exceeds $2,500. PFIs will find the actual/actual remittance option particularly attractive for ease of operation, they value the up-front price benefit and they are knowledgeable in actual/actual investor reporting.
• Remittance Amount – Actual P&I collections, less a servicing fee• Accounting Cut-Off Date – Falls on the last day of calendar month• Investor Reporting – Reports distributed by the fifth business day following the cut-off• Remittance Frequency – When collected P&I exceeds $2,500 net of servicing fees, and the account balance on the first business day of the month
• Non-interest bearing custodial P&I account maintained at the FHLBank• Electronic investor-reporting• Access to the eMPF® website
Actual/Actual Single Remittance
Actual/Actual Single Remittance offers an alternative option to remit MPF principal and interest. This option features a single monthly remittance with a simple investor reporting process. The single remittance option provides a significant float income benefit for all P&I payments received in an accounting cycle. This float value results from all collections received in a calendar month being remitted on the 18th of the following month. Members will find this program attractive if they value the float income, are new to investor reporting, or prefer a simple remitting process.
• Remittance Amount – Actual P&I collections, less a servicing fee• Accounting Cut-Off Date – Falls on the last day of calendar month• Investor Reporting – Reports distributed by the fifth business day following the cut off• Remittance Date – Date falls on the 18th of the month following the cut off, or the prior business day if the 18th is not a business day
Scheduled/Scheduled Remittance features a competitive up-front price and an investor-reporting concept similar to agency scheduled/scheduled. However, with the scheduled/scheduled option, scheduled monthly principal and interest is advanced through liquidation. A full month of interest for payoffs and curtailments is paid. Members will find this option attractive if they value the competitive up-front price and if they have experience utilizing this remittance type and sophisticated investor-reporting process.
1) Scheduled P&I, less a servicing fee (remitted the current month);
2) Unscheduled principal (curtailments and payoffs remitted the month following receipt);
3) 30-days interest expense on payoffs and curtailments
• Accounting Cut-Off Date – falls on the last day of calendar month• Investor Reporting – reports distributed by the fifth business day following the cut-off• Remittance Date – date falls on the 18th of the month following the cut off, or the prior business day if the 18th is not a business day
Servicing Released Alternatives
Loan servicing aggregators that partner with the MPF Program provide a unique benefit in their offering to purchase servicing. The servicing agreements include a 'non-compete clause', meaning they will not solicit your customers for ancillary products and services that your institution may provide. PFIs should contact the MPF Bank in their district for information regarding servicing release options that may be available to suit their specific needs.
Founded in 1952, Colonial Savings is a national, multi-service financial institution headquartered in Fort Worth, Texas, and is one of largest servicers of mortgage loans in the United States with a servicing portfolio exceeding $26 Billion. It is the parent company of Colonial National Mortgage, a leading retail mortgage lender; CU Members Mortgage, which provides mortgage services to credit unions nationwide; and Community Bankers Mortgage, which provides mortgage origination and servicing to community banks. The company is privately held and provides a full array of personal and business financial products and insurance. For additional information, please visit GoColonial.com.
Colonial Savings Concurrent Sale of Servicing Option
Colonial Savings Concurrent Servicing Sale Manual
Colonial Savings Concurrent Servicing Sale SRP ScheduleNationstar Mortgage
Nationstar is publicly traded (NYSE:NSM), a strong financial counterparty and a proud partner with the Federal Home Loan Banks, their valued Participating Financial Institutions (PFIs) and more importantly the borrowers. They are a top mortgage servicer across Ginnie Mae, Fannie Mae, Freddie Mac and Non-Agency products. As of June 30, 2015, the firm has a servicing portfolio with over 2.4 million customers, totaling over $400B in unpaid principal balance. In addition, Nationstar received the Fannie Mae Five STAR designation in 2014.
Nationstar Mortgage Concurrent Servicing Sale Manual
Nationstar Mortgage About Us
Nationstar Mortgage Key ContactsRedwood Trust
Redwood Trust, Inc. (Redwood) is a publicly traded (NYSE:RWT), real estate investment trust (REIT) established in 1994 and has an equity market capitalization of approximately $1.1 billion.
Since early 2014, Redwood has purchased mortgage servicing rights backed by over $20 billion of conforming mortgage loans that were sold to either Fannie Mae or Freddie Mac. Redwood utilizes CENLAR as its sub-servicer. CENLAR has been actively engaged in mortgage loan servicing and sub-servicing as a core business for more than 40 years. As owner of the servicing assets, Redwood closely manages and monitors CENLAR in order to ensure the highest quality of service to the borrower.
Redwood Whole Loan Servicing Transfer Manual
Redwood About Us
Redwood Key Contacts
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