MPF Program: Retaining Relationships, Maintaining Profitability
By: Daniel McLean, Vice President, Quality Control and Secondary Market Sales, Credit Union 1
Members don’t want to take their mortgage business elsewhere. After all, many already have their savings, checking, credit cards, direct deposit, and auto loans with their home credit union, and they prefer to come to us for their mortgage loan transactions as well. That’s why Credit Union 1—based in Rantoul, Illinois, with roughly 85,000 members—began selling conventional loans through the Mortgage Partnership Finance® (MPF) Program shortly after we joined the Federal Home Loan Bank of Chicago in 2016. The Program’s unique features have allowed us to provide the mortgage loan services our members want at competitive rates, while preserving (or even increasing) profitability.
The Opportunity to Retain Servicing
We use multiple MPF Program products, which provide the option to retain servicing when selling conventional mortgage loans into the secondary market. In the past, when we would originate and sell a mortgage loan to another investor that would take on servicing ownership, we found that our membership didn’t care for the prospect of working with another lender. A mortgage is the largest borrowing transaction many of our members will ever make, and they want to maintain a consistent relationship not only during the origination process but afterwards, too, so they can continue to make their payments with us and, if they have questions or concerns, they can call us, live chat, or even come into their local branch. As a bonus, this option comes with ongoing servicing fee income of 25 basis points for conventional loans.
No Loan-Level Price Adjustments
The ability to originate loans and sell them through the MPF Traditional products without loan-level price adjustments gives us the flexibility to compete with other lenders. Sometimes members tell us they want to keep their business with our credit union but they’ve received a matching or even better quote than what we’ve initially offered. In these cases, the lack of LLPAs gives us the pricing flexibility we need to compete and continue to serve our membership without sacrificing profitability.
Pairing with Other FHLBank Programs
Because the MPF Program is designed to provide secondary market access to eligible members of the Federal Home Loan Banks, participating credit unions can combine the MPF Program with other FHLBank products to pass even greater benefits on to their members. For example, we often pair MPF loans with FHLBank Chicago’s Downpayment Plus® (DPP®) assistance program to help our income-eligible members realize their homeownership goals, even in a highly competitive seller’s market.
Credit Union 1 has found the MPF Program to be one of the best mortgage programs available. For any credit union that is having a hard time competing, finds itself being undercut by other mortgage lenders, or wants to maintain member relationships throughout the life of its mortgage loans, the MPF Program could present an excellent opportunity. To learn more, reach out to your local FHLBank or visit fhlbmpf.com.