A Growing Credit Union Leverages the Federal Home Loan Bank’s Mortgage Partnership Finance® Program to Serve its Existing and Prospective Members

A Growing Credit Union Leverages the Federal Home Loan Bank’s Mortgage Partnership Finance® Program to Serve its Existing and Prospective Members

By: Chris Duncan, EVP Loan Manager, Clarion Federal Credit Union

Since Clarion Federal Credit Union (FCU) was chartered in 1940, we’ve grown from 20 to more than 12,000 members, and from $100 to $148 million in assets. In the last decade, we’ve entered a new period of expansion with the addition of two branches, and we now serve four Western Pennsylvania counties. Today, we’re one of the fastest-growing credit unions among our peers in terms of membership – with 8% growth last year and 9% expected this year. The Federal Home Loan Bank’s (FHLBank) Mortgage Partnership Finance® (MPF®) Program has been integral in helping us to sustain that growth.

Before Clarion FCU enrolled in the MPF Program in 2018, we were unable to offer a long-term fixed-rate mortgage product. When members (or prospective members) inquired about these loans, we were forced to send them to other lending institutions, risking the relationship because we couldn’t meet their needs.

For us, the solution was the MPF Program offered through our FHLBank Pittsburgh membership. The MPF Program enables FHLBank members to sell mortgage loans into the secondary market. While the MPF Program offers several products covering a range of loan types, we chose the MPF Traditional products for conventional/conforming loans. Here are just a few of the features that make these products convenient for us and beneficial to our members:

Savings for members (old and new). In these difficult times, one of the few positives we’ve seen is that falling rates have allowed many people to buy their first home or refinance their existing mortgage. With the help of the MPF Program – which offers competitive pricing and no Loan-Level Price Adjustments (LLPAs) for mortgages sold into the MPF Traditional products – we’ve been able to provide our members with significant savings (sometimes as much as tens of thousands of dollars). And we’ve attracted new members as rate-shoppers discover that we offer lower rates than they’ve found elsewhere, or rates similar to our competitors with lower fees.

Risk management (and additional income). For the long-term fixed-rate loans we deliver into the MPF Program, the MPF Traditional products allow us to move the interest-rate risk off our books, while earning Credit Enhancement (CE) fees for sharing a portion of the credit risk.

Flexibility to retain servicing. Because Clarion FCU’s primary goal in working with the MPF Program is to cultivate and maintain member relationships by offering a full array of loan products, the option to retain servicing is very important to us. We want to assure our members that they will be dealing with us throughout the life of the loan. (The servicing fees we earn for these loans are a welcomed bonus.)

Strong support. We can rely on the MPF Program’s helpful support staff and materials anytime we have questions, whether about a particular loan or general inquiries.

If you’re considering the MPF Program – and how it could fit into your credit union’s growth strategy – I recommend contacting your regional FHLBank or visiting fhlbmpf.com to learn more.