Homeownership in a High-Rate Environment: The MPF® Program Helps Keep the Dream in Reach
by Greg Couture, Mortgage Operations Director, Texas Tech Credit Union
When our members imagine their future, homeownership is often an essential part of that vision. Sharp increases in interest rates over the past few years haven’t changed that, but they have pushed many potential homebuyers to the sidelines—especially those with high debt-to-income ratios. By working with the Mortgage Partnership Finance® (MPF) Program, Texas Tech Credit Union has made the dream of homeownership more realistic for many of our members, even in this high-rate environment.
Without LLPAs, We Can Keep Rates Lower
Texas Tech Credit Union serves about 37,000 members with ties to Texas Tech and other educational institutions in the Lubbock, Texas area, with branches in Amarillo, Floydada, and, most recently, Abilene. Many members of our community, such as residents at our local teaching hospitals, are working to pay off student loans that must be included in their debt-to-income ratio, which can raise their interest rates even higher and add to their financial burden.
Competitive pricing was one of the reasons we began selling our conventional mortgage loans through the MPF Program in 2016, as well as the opportunity to be rewarded for the high quality of our loans. With the MPF Traditional credit risk-sharing products, we pay no loan-level price adjustments and receive credit enhancement income, allowing us to offer more competitive rates. With home prices and interest rates as high as they are, every eighth of a point makes a difference for members hoping to achieve the goal of homeownership without overextending their monthly budget.
Quick Turnaround Helps Us Lend More
Managing liquidity can be a challenge for lenders when interest rates rise. Texas Tech Credit Union originates a high volume of mortgages for our asset size—too high to keep on our balance sheet—which means it’s important for us to sell and transfer loans promptly so we can turn around and provide loans to more members. With the MPF Traditional products, we’ve been able to complete this process quickly and easily, usually within 48 hours versus the seven to 10 days we’d expect with another investor. And given the volume of loans we originate, we also appreciate the option to release servicing rights and earn an upfront service-released premium in exchange.
A Partnership That Supports Our Strategy
Our mortgage department has built a strong relationship with our MPF Sales Director and other MPF staff that has proved rewarding to us and our members as we’ve adapted to the changing home loan landscape. And our participation in the MPF Program is just one part of Texas Tech Credit Union’s wider partnership with the Federal Home Loan Bank of Dallas. You can learn more about how the MPF Program can support your credit union’s mortgage strategy, as well as the broader benefits of FHLBank membership, at fhlbmpf.com.