Lenders Say Servicing-Release Option Would Benefit MPF.(Mortgage Partnership Finance)(Brief Article)

The Chicago Federal Home Loan Bank's Mortgage Partnership Finance program posted an impressive 760% growth rate last year, but some lenders say they want the option to sell loans into the program and release the servicing rights and credit enhancement on the loans.

Some of the largest mortgage lenders are pressing the Federal Home Loan Banks to develop a securitization program and to allow them to sell their loans servicing-released.

On Jan. 5 at Chicago's O'Hare Airport, members of the Financial Services Roundtable met with FHLBank presidents and top staff to discuss the future the FHLBank mortgage purchase programs.

Participants have been reluctant to disclose the substance of the meeting, but sources indicate the representatives of some the nation's largest integrated financial services firms don't believe the FHLBanks can handle large volumes of loans unless they develop a securitization program.

So far, the FHLBanks have been using their existing capital resources to portfolio $15.4 billion in MPF loans. A securitization program, which would require regulatory approval, would place MPF and the Federal Home Loan Banks in direct competition with Fannie Mae and Freddie Mac.

"Going down the road, you have to look at ways to move those assets off the balance sheet. The most obvious way is to securitize," a Chicago FHLBank official said.

The Chicago Bank is looking at alternatives, including securitization. "We are looking at multiple options," he said.